The Income Statement for Nighty Night,Inc Nighty Night,Inc

The income statement for Nighty Night,Inc.is divided into two product lines,blankets and pillows,as follows:
$$\begin{array} { | l | r | r | r | } \hline & { \text { Blankets } } &{ \text { Pillows } } & { \text { Total } } \\\hline \text { Sales revenue } & \$ 700,000 & \$ 510,000 & \$ 1,210,000 \\\hline \text { Variable costs } & \underline { 350,000 } & \underline { 440,000 } & \underline { 790,000 } \\\hline \text { Contribution margin } & 350,000 & 70,000 & 420,000 \\\hline \text { Fixed costs } & \underline { 85,000 } & \underline { 96,000 } & \underline { 181,000 } \\\hline \text { Operating income (loss) } & \$ 265,000 & \$ ( 26,000) & \$ 239,000 \\\hline\end{array}$$ Nighty Night,Inc.should eliminate the pillows product line only,if by doing so,they can eliminate more than $70,000 of fixed costs.

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