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Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $39,000 as follows: Drafty Model Sales revenue $ 160,000 Less:

Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $39,000 as follows:

Drafty Model
Sales revenue $ 160,000
Less: Variable costs 112,000
Contribution margin $ 48,000
Less: Direct fixed costs 41,000
Segment margin $ 7,000
Less: Common fixed costs 46,000
Net operating income (loss) $ (39,000)

Eliminating the Drafty product line would eliminate $41,000 of direct fixed costs. The $46,000 of common fixed costs would be redistributed to Blowing Sands remaining product lines. Will Blowing Sands net operating income increase or decrease if the Drafty model is eliminated? By how much?

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