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Camera Corner is considering eliminating Model AE2 from its camera line because of losses over the past quarter. The past three months of information for

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Camera Corner is considering eliminating Model AE2 from its camera line because of losses over the past quarter. The past three months of information for Model AE2 are summarized below: Sales (1,000 units) $300,000 Manufacturing costs: Direct materials 150,000 Direct labor ($15 per hour) 60,000 Overhead 100,000 Operating loss ($10,000) Overhead costs are 70% variable and the remaining 30% is depreciation of special equipment for model AE2 that has no resale value If Model AE2 is dropped from the product line, operating income will: increase by $30,000

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