Castillo Corporation Has Provided You with the Following Budgeted Income

Castillo Corporation has provided you with the following budgeted income statement for one of its products:

Castillo has just encountered environmental problems with the product and will be forced to drop the product line altogether.Castillo will be able to eliminate 75% of the fixed costs.What will be the impact on operating income of the company?

A) Operating income will decrease by $232,500.
B) Operating income will decrease by $37,500.
C) Operating income will increase by $232,500.
D) Operating income will increase by $37,500.