Problem
Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:
|
Total
|
Cups
|
Pitchers
|
|
Sales Revenue
|
460000
|
310000
|
150000
|
|
Variable Expenses
|
355000
|
235000
|
120000
|
|
Contribution Margin
|
105000
|
75000
|
30000
|
|
Fixed Expenses
|
76000
|
38000
|
38000
|
|
Operating Income (loss)
|
29000
|
37000
|
(8000)
|
If $22364 in fixed costs will be eliminated by dropping the Pitcher line, how will operating income be affected? If income drops, use a negative sign in front of the number.