Balser Corporation manufactures and sells a number of products, including a product called JYMP$.$ Results for last year for the manufacture and sale of JYMPs are as follows:

Sales

$ $960,000$

Less expenses:

Variable production costs

$ $464,000$

Sales commissions

$144,000$

Salary of product manager

$100,000$

Fixed product advertising

$160,000$

Fixed manufacturing overhead

$132,000$

$1,000,000$

Net operating loss

$ $(40,000)$

Balser is trying to decide whether to discontinue the manufacture and sale of JYMPs$.$ All expenses other than fixed manufacturing overhead are avoidable if the product is dropped. None of the fixed manufacturing overhead is avoidable.

Assume that dropping Product JYMP would result in a $$90,000$ increase in the contribution margin of other products. If Balser chooses to discontinue JYMP$,$ the annual financial advantage $($disadvantage$)$ of eliminating this product should be:

$($Course LO $6)$

Question $9$ options:

$($$$40,000)$

$$40,000$

$($$$2,000)$

$$50,000$