GPS Corporation, a manufacturer of global positioning system devices, is considering eliminating the Oceania Model from its line of devices because of losses over the past year. The past year's information on the Oceania Model is provided below:

Overhead costs are 80% variable, and the remaining 20% is an allocation of the general manager's salary (the general manager is over multiple product lines). If the Oceania Model is dropped, what will be the most likely impact on gross margin for the firm in the next year?

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Sales (10,000 units). Manufacturing costs: Direct materials. Direct labor. Overhead Gross Margin $1,000,000 450,000 250,000 400,000 $ (100,000)