Ortega Interiors Provides Design Services to Residential and Commercial Clients

Ortega Interiors provides design services to residential and commercial clients. The residential services produce a contribution margin of $450,000 and have traceable fixed operating costs of $480,000. Management is studying whether to drop the residential operation. If closed, the fixed operating costs will fall by $370,000 and Ortega's income will:

A) increase by $30,000.
B) increase by $80,000.
C) increase by $340,000.
D) decrease by $80,000.
E) decrease by $340,000.

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