San ruiz interiors provides design services to residential and commercial clients. the residential services produce a contribution margin of $520,000 and have traceable fixed operating costs of $550,000. management is studying whether to drop the residential operation. if closed, the fixed operating costs will fall by $450,000 and san ruiz' income will: multiple choice a. increase by $30,000. b. increase by $70,000. c. increase by $420,000. d. decrease by $70,000. e. decrease by $420,000.

San income will decrease by $70,000

so correct option is D. decrease by $70,000

Explanation:

given data

contribution margin = $520,000

fixed operating costs = $550,000

Decrease fixed operating costs fall = $450,000

solution

as if residential operations are closed

we find here Decrease in income

Decrease in income = contribution margin - Decrease of fixed operating costs    1

Decrease in income = $520,000 - $450,000

Decrease in income = $70,000

so that San income will decrease by $70,000

so correct option is D. decrease by $70,000

c

explanation: