A company is thinking about dropping one of its product lines. The monthly income statement for the

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Question:

A company is thinking about dropping one of its product lines. The monthly income statement for the product line is below: Revenue $100,000 Variable Costs $31,000 Salary of Product Line Manager $10,000 Depreciation $4,000 Rent - factory space $14,000 Corporate overhead allocation $11,500 The company provides the following additional information: The depreciation above is for specialized machinery that would be disposed of if the product line were dropped. The company produces this product in a factory where some of its other products are also produced, so the company would need to continue renting the factory if this product line were dropped. Corporate overhead is allocated to each product line based on total sales revenue, but total corporate overhead does not change when a product line is introduced or dropped.

What is the total expected monthly financial impact for the company (i..e, how will cash flows change) if they drop this product? (Indicate an increase with a positive number and a decrease with a negative number.)