ABC Corporation makes mattresses in three sizes: twin, queen and king. Twin mattresses have shown a loss for several years, similar to the operating loss shown below:
Sales | $150,000 | $250,000 | $280,000 |
Variable costs | 75,000 | 150,000 | 190,000 |
Contribution margin | 75,000 | 100,000 | 90,000 |
Fixed costs | 80,000 | 80,000 | 80,000 |
Operating income | ($ 5,000) | $ 20,000 | $ 10,000 |
None of the fixed costs are avoidable. What will be the total operating income for the corporation if twin mattresses are discontinued?
◦ $105,000 profit
◦ $30,000 profit
◦ $50,000 loss
◦ $15,000 loss