Ajax company has four product lines, one of which reported t…
Ajax company has four product lines, one of which reported the following financial results for the current year:Sales$260,000Variable expenses 220,000Contribution margin40,000Fixed expenses 90,000Net loss$ (50,000)If this product line is eliminated, 60% of the fixed expenses can be eliminated because they are direct fixed costs, and the remaining 40% of the fixed costs will be allocated to other product lines because they are allocated fixed costs. If management decides to eliminate this product line, the company’s operating income is expected to