1. Aladdin's Gyrocery has two product segments: falafel and gyros. Data for each product segment is as follows:

	Gyros	Falafel
Units sold	9,500	6,300
Revenue	$85,500	$37,800
Variable Costs	$38,000	$19,900
Traceable Fixed Costs	$19,000	$12,500
Allocated Fixed Costs	$7,000	$6,500
Total	$21,500	-$1,100

Aladdin's is considering dropping the falafel segment. If it is dropped, 28% of allocated fixed costs are avoidable and 100% of traceable fixed costs are avoidable. In addition, if the segment is dropped, Aladdin's can sell special equipment used to make falafel for $710.

If the Falafel segment is dropped, what will the new net operating income be?

Round your answer to the nearest dollar.

2.

Should Aladdin's Gyrocery drop the Falafel segment?

No, Net Operating Income would decrease

Yes, Net Operating Income would increase

Yes, Net Operating Income would decrease

No, Net Operating Income would increase