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Company P has provided the monthly income statement shown below: Total Product A Product B Product C Sales $100,000 $50,000 $20,000 $30,000 Variable Expense 60,000

Company P has provided the monthly income statement shown below:

Total Product A Product B Product C
Sales $100,000 $50,000 $20,000 $30,000
Variable Expense 60,000 30,000 10,000 20,000
Contribution Margin 40,000 20,000 10,000 10,000
Fixed Expenses:
Facilities Cost 9,000 4,500 1,500 3,000
Depreciation 6,000 3,000 1,200 1,800
Supervisor's salaries 5,000 1,500 500 3,000
Maintenance 3,000 1,500 600 900
Administrative Expenses 10,000 3,000 2,000 5,000
Total fixed expenses 33,000 13,500 5,800 13,700
Net operating income 7,000 6,500 4,200 -3,700

The owners are considering dropping Product C. The following additional information is available:

- If product C is dropped, sales volume of Product B is expected to increase by 10%. - The $3,000 facilites cost of Product C is a traceable fixed cost. - The company's total depreciation would not change if Product C were dropped. - The maintenance department will be able to reduce monthly expenses by $500 if Product C is dropped. - If product C were dropped, the salarues of two administrative persons would be cut. Their combined salaries (included in Administrative expense) total $3,000 per month. Question: Show your work - by how much would the NOI of Pearl increase or deacreas if they drop Product C?

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