Dexter Products, Inc., manufactures and sells a number of items, including an overnight case. The company has been experiencing losses on the overnight case for some time, as shown on the following contribution format income statement:

Dexter Products, Inc. Income StatementOvernight Cases For the Quarter Ended June 30
Sales				$	450,000
Variable expenses:
Variable manufacturing expenses	$	130,000
Sales commissions		48,000
Shipping		12,000
Total variable expenses					190,000
Contribution margin					260,000
Fixed expenses:
Salary of product-line manager		21,000
General factory overhead		104,000	*
Depreciation of equipment (no resale value)		36,000
Advertisingtraceable		110,000
Insurance on inventories		9,000
Purchasing department		50,000
Total fixed expenses					330,000
Net operating loss				$	(70,000	)

*Allocated on the basis of machine-hours.

Allocated on the basis of sales dollars.

Discontinuing the overnight cases would not affect the companys sales of its other product lines, its total general factory overhead, or its total purchasing department expenses.

Required
a.	Compute the increase or decrease of net operating income if the overnight case are continued or discontinued.

b.

Would you recommend that the company discontinue the manufacture and sale of overnight cases?

	Yes
	No