Surie corporation is considering dropping product D$14$E$.$ Data from the company's accounting system appear below:

Sales $$630,000$

variable expenses $$265,000$

fixed manufacturing expenses $$238,000$

fixed selling and administartion expenses $$186,000$

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $$224,000$ of the fixed manufacturing expenses and $$169000$ of the fixed selling and administartion expenses are avoidable$($traceable$)$ if product D$14$E is discontinued.

What would be the increase$($decrease$)$ to income of dropping D$14$E$?$ Should the prduct be dropped? $8$ marks

Lost contribution margin:

Avoidable fixed expenses:

Increase $($decrease$)$ in operating income

decision

reason