Anderson Document Services, a document creation and copying company, has two departments, Design and Copying. The companys most recent monthly contribution format income statement follows:

	Department
	Total			Design			Copying
Sales	$	115,000		$	35,000		$	80,000
Variable expenses		70,750			22,750			48,000
Contribution margin		44,250			12,250			32,000
Fixed expenses		24,640			15,400			9,240
Operating income (loss)	$	19,610		$	(3,150	)	$	22,760

A study indicates that $6,600 of the fixed expenses being charged to the Design Department are sunk costs or allocated costs that will continue even if the Design Department is dropped. In addition, the elimination of the Design Department would result in a 5% decrease in the sales of the Copying Department.

Required:

a.	If the Design Department is dropped, what will be the effect on the operating income of the company as a whole?

b.	Should the Design department be dropped?
	multiple choice Yes No