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The income statement for Eideldown, Inc. is divided by its two product lines, blankets and pillows, as follows: Sales revenue

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Answer #1

The fixed cost of $85,000 of pillow line will be incurred even if it is dropped.

Operating income when pillow line is dropped = $365,000 - $85,000 = $280,000

Existing operating income = $550,000

Decrease in operating income if pillow line is dropped = $550,000 - $280,000 = $270,000

True.

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