The income statement for Sweet Dreams Company is divided by its two product lines, blankets and pillows, as follows:
Blankets Pillows Total Sales revenue $820,000 $320,000 $1,140,000 Variable costs 260,000 265,000 525,000 Contribution margin 555,000 60,000 615,000 Fixed costs 56,000 106,000 162,000 Operating income (loss) $499,000 $(46,000) $453,000If Sweet Dreams can eliminate total fixed costs of $32,000 by dropping the pillows line, operating income will increase by $46,000.
(A) True
(B) False
