ABC manufactures two products: Regular and Super. The results of operations for 20x1 follow.

	Regular		Super				Total
Units	10,000			3,700		13,700
Sales	$240,000			$740,000		$980,000
Less: Cost of goods sold	180,000			481,000		661,000
Gross margin	$ 60,000			$259,000		$319,000
Less: Selling expenses	60,000			134,000		194,000
Operating income	$ 0			$125,000		$125,000

Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed.

a. ABC wants to drop the Regular product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 15% because there is no alternative use of the facilities. No other non-variable costs are avoidable. What would be the impact on operating income if Regular is discontinued?

b. Disregard the information in the previous question. If ABC eliminates Regular and uses the available capacity to produce and sell an additional 1,600 units of Super, what would be the impact on operating income?