The income statement for Nighty Night, Inc is divided into two product lines, blankets and pillows, as follows
Blankets Pillows Total
Sales revenue $800,000 $510,000 $1,310,000
Variable costs 450,000 440,000 890,000
Contribution margin 350,000 70,000 420,000
Fixed costs 65,000 96,000 161,000
Operating income (loss) $285,000 $(26,000 ) $259,000
Nighty Night, Inc should eliminate the pillows product line only, if by doing so, they can eliminate more than $70,000 of fixed costs.
Indicate whether the statement is true or false
TRUE
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