Complete:

Victoria Company suffered losses with its product Smize over the last year. It is considering whether the product should be eliminated altogether. The information for the last quarter is summarised below: Sales (4,700 units @ $50) $235,000 Manufacturing costs: Direct materials 120,000 Direct labor ($15 per hour) 90,000 Overhead 160,000 Operating loss ($135,000) Overhead costs are 25% variable and the remaining 75% is depreciation of special equipment for this product that has no resale value. If the product Smize is dropped from the product line, operating income will 0 decrease by $65,000 0 decrease by $25,000 0 d eeeeeee by $5,000 0 i eeeeeee by $15,000 0 increase by $25,000