Ankeil Corp. is deciding whether to keep or drop product SL412. Data from the company's accounting system regarding the product is as follows:

Sales	$	700,000
Variable expenses	$	300,000
Fixed manufacturing expenses	$	252,000
Fixed selling and administrative expenses	$	200,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. If product SL412 is discontinued, $197,500 of the fixed manufacturing expenses and $112,500 of the fixed selling and administrative expenses are avoidable.

Required:

a. According to the company's accounting system, what is the net operating income earned by product SL412? (Net losses should be indicated by a minus sign.)

b. What would be the financial advantage (disadvantage) of dropping product SL412? Should the product be dropped?

C)

No

Yes

D)

No

No