Reference no: EM132514467

The income statement for Germain Appliances is divided by its two product lines, Toasters and Microwaves, as follows:

                                                      Toaster                      Microwave                     Total

Sales Revenue                           $620,000               $255,000               $875,000

Variable Expenses                     $440,000                   $210,000             $650,000

Contribution Margin                 $180,000                      $45,000                $225,000

Fixed Expenses                     $75,000                    $75,000                  $150,000

Operating income (loss)        $105,000                 ($30,000)                    $75,000

Question 1: If Germain Appliances can eliminate fixed costs of $34,000 and increase the sale of Toasters by 6300 units at a selling price of $30 per unit and a contribution margin of $12 per unit, then discontinuing the Microwaves should result in what difference in total operating income?