The Income Statement for Sweet Dreams Company Is Divided by Its

The income statement for Sweet Dreams Company is divided by its two product lines, blankets and pillows, as follows:
$$\begin{array} { | l | r | r | r | } \hline & \text { Blankets } & \text { Pillows } & \text { Total } \\\hline \text { Sales revenue } & \$ 620,000 & \$ 300,000 & \$ 920,000 \\\hline \text { Variable expenses } & 465,000 & 240,000 & 705,000 \\\hline \text { Contribution margin } & 155,000 & 60,000 & 215,000 \\\hline \text { Fixed expenses } & 76,000 & 76,000 & 152,000 \\\hline \text { Operating income (loss) } & \$ 79,000 & \$ ( 16,000 ) & \$ 63,000 \\\hline\end{array}$$ If fixed costs remain unchanged and Sweet Dreams drops the pillow line, which of the following statements is correct?
1) Total operating income will decrease $60,000.
2) Total contribution margin will increase $60,000.
3) Total operating income will increase $16,000.

A) 1 only
B) both 2 and 3
C) 3 only
D) 2 only