Rally Shoe Company is trying to decide whether or not to continue making bowling shoes. The following information is available for the segments.
Bowling Shoes Athletic Shoes Boots
Sales $120,000 $420,000 $360,000
Variable Costs 64,000 220,000 140,000
Contribution Margin 56,000 200,000 220,000
Direct Fixed Costs 45,000 70,000 90,000
Allocated Common Fixed costs 20,000 70,000 60,000
Net Income ($9,000) $60,000 $70,000
Assume that if bowling shoes were dropped, sales of athletic shoes would drop by 10%. What impact would losing 10% of the sales of athletic shoes have on overall profitability?
A. Income would decrease by $31,000.
B. Income would decrease by 30,000.
C. Income would increase by $3,000.
D. Income would decrease by $81,000.