Abba, Inc., is considering dropping a segment. During the prior year, the segment had sales of $207,000 and a contribution margin of $124,000. Fixed expenses consist of:

Manager's salary	$60,000
Rent	50,000
Advertising	20,000
Administrative	35,000
Total fixed expenses	$165,000

The managers salary and advertising are direct fixed costs. Of the administrative expenses, $10,000 is a direct fixed cost and the rest is part of common fixed costs. The rent expense is allocated to segments based on sales and represents a share of the total cost for the building. If this segment is dropped, overall net income will Blank______.

Multiple choice question.

increase by $16,000

increase by $41,000

decrease by $124,000

decrease by $34,000

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