The income statement for Sweet Dreams Company is divided by its two product lines, blankets and pillows, as follows:
If Sweet Dreams can eliminate fixed costs of $50,000 and increase the sale of blankets by 3,000 units at a selling price of $20 per unit and a contribution margin of $5 per unit, then dropping the pillows should result in which of the following?
A) An increase in operating income of $25,000.
B) A decrease in operating income of $5,000.
C) No change in total operating income
D) An increase in total operating income of $5,000.
Correct Answer:
Verified
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