$*$Allocated based on total sales revenue

Mohave determined that eliminating the Azul model would cause sales of the Indigo and Verde models to increase by $10$ percent and

$15$ percent, respectively. Variable costs for these two models would increase proportionately. Although the direct fixed costs could be

eliminated, the common fixed costs are unavoidable. The common fixed costs would be redistributed to the remaining two products.

Required:

$1-$a$.$ Complete the table given below, assuming Mohave Corporation drops the Azul line.

$1-$b$.$ Will Mohave's net operating income increase or decrease if the Azul model is eliminated? By how much?

Should Mohave drop the Azul model?

$3-$a$.$ Complete the table given below assuming that Mohave had no direct fixed overhead in its production information and the entire

$$51,000$ of fixed cost was common fixed cost.

$3-$b$.$ Should Mohave drop the Azul model?

$3-$c$.$ What is the increase or decrease in the net operating income of Mohave?