A study has been conducted to determine if Product A should be dropped. Sales of the product total $230,000 per year, variable expenses total $151,000 per year. Fixed expenses charged to the product total $103,500 per year. The company estimates that $46,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall net operating income would
Multiple Choice
increase by $34,500 per year.
decrease by $11,500 per year
increase by $23,000 per year.
decrease by $23,000 per year.