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Down at ABC Corporation, one of the products, R2D2 has been considered a drag on profits for some time. In fact, management is considering discontinuing

Down at ABC Corporation, one of the products, R2D2 has been considered a drag on profits for some time. In fact, management is considering discontinuing the product altogether. Data from the company's accounting system appear below:

Sales $254,000
Variable expenses $108,000
Fixed manufacturing expenses $101,000
Fixed selling and administrativeexpenses $62,000

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $48,000 of the fixed manufacturing expenses and $32,000 of the fixed selling and administrative expenses are avoidable if product R2D2 is discontinued. What would be the effect on the company's overall net operating income if product R2D2 were dropped?

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