A company has three product lines, one of which reflects the following results:
| Sales | $430,000 |
| Variable expenses | 250,000 |
| Contribution margin | 180,000 |
| Fixed expenses | 280,000 |
| Net loss | $ (100,000) |
If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company’s net income will
|
increase by $100,000. |
|
decrease by $180,000. |
|
decrease by $12,000. |
|
increase by $12,000. |