The income statement for Slumber Company is divided by its two product lines, blankets and pillows, as follows:Sales revenueVariable costsContribution marginFixed costsOperating income (loss)Blankets$620,000Pillows$298,000Total$918,000(465,000) (242,000) (707,000)$155,000 $56,000 $211,000(75,000) (74,000) (149,000)$80,000 $(18,000)$62,000Slumber is considering eliminating the pillows product line. If this line is eliminated, Slumber will be able to eliminate$74,000 of total fixed costs. How would this business decision impact operating income?A. increase of $130,000 in operating incomeOB. increase of $18,000 in operating incomeOC. decrease of $56,000 in operating incomeOD. increase of $74,000 in operating income

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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