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: Sales $ 500,000 Variable expenses: Variable manufacturing expenses $ 240,000 Sales commissions 75,000 Shipping 25,000 Total variable expenses 340,000 Contribution margin 160,000 Fixed expenses: Salary of product-line manager $ 65,000 Advertising for this product 35,000 General factory overhead 25,000 Depreciation on equipment 20,000 Insurance on this products inventories 8,000 Purchasing department 15,000 Total fixed expenses 168,000 Net operating loss $ (8,000) If Product A is dropped, the company estimates that it could produce 5,000 additional units of another product that earns a contribution margin of $11 per unit. 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 $3,000 $23,000 $33,000 $43,000