Prior operating income = Model D operating income + Model E operating income - Model F operating loss
= $19,000 + $2,000 - $9,000
= $12,000
After Discontinues of model F,
Income (loss) from the space previously used for model F = Income from Rent - Fixed expenses (Model F)
= $15,000 - $19,000
= ($4,000)
Total Operating income after discontinuation of Model F = Model D operating income + Model E operating income - Income (loss) from the space previously used for model F
= $19,000 + $2,000 - $4,000
= $17,000
Operating income increases by $5,000 ($17,000 - $12,000).
Option C. is the correct answer.
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