Castillo has just encountered environmental problems with the product and will be forced to drop the product line altogether. Castillo will be able to eliminate 60% of the fixed costs. What will be the impact on operating income of the company?
Castillo Corporation has provided you with the following budgeted income statement for one of its products:
A) Operating income will decrease by $192,000.
B) Operating income will decrease by $78,000.
C) Operating income will increase by $192,000.
D) Operating income will increase by $78,000.
B) Operating income will decrease by $78,000.
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