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Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $42,000 as follows: Sales revenue Less: Variable costs Contribution
Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $42,000 as follows: Sales revenue Less: Variable costs Contribution margin Less: Direct fixed costs Segment margin Less: Common fixed costs Net operating income (loss) Drafty Model $310,000 217,000 $ 93,000 85,000 $ 8,000 50,000 $(42,000) Eliminating the Drafty product line would eliminate $85,000 of direct fixed costs. The $50,000 of common fixed costs would b redistributed to Blowing Sand's remaining product lines. Will Blowing Sand's net operating income increase or decrease if the Drafty model is eliminated? By how much? Total Profit Decreases by
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