Assume that a company manufactures and sells a variety of products, one of which it refers to as Product A. The company is considering dropping Product A because the income statement for this product is reporting a net operating loss as shown below: $500,000 $ 240,000 75,000 25,000 340,000 160,000 Sales Variable expenses Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses Salary of product-line manager Advertising for this product General factory overhead Depreciation on equipment Insurance on this products inventories Purchasing department Total fixed expenses Net operating loss $ 65,000 35,000 25,000 20,000 8,000 15,000 168,000 $ (8,000) 1 Product Als dropped, the company would transfer its product line manager to another department and discontinue a search for a new manager that the company anticipated paying a salary of $51,000. The general factory overhead and purchasing department expenses are common costs that the company allocates to all of its products using total sales dollars as the allocation base. The equipment used to manufacture Product A does not wear out through use and it has no resale value. What is the financial advantage disadvantage) of dropping Product A? Multiple Choice $8.000 $146,000) $166,000) $126,000)