Hiroole sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the company's retail floor space. The president of Hiroole is trying to decide whether the company should continue offering furniture or concentrate on computer equipment. Below is a product line income statement for the company. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 13 percent without affecting direct fixed costs. Allocated fixed costs are assigned based on relative sales.

Computer Equipment Home Office Furniture Total

Sales $1,405,000 $1,081,850 $2,486,850

Less cost of goods sold 913,250 786,800 1,700,050 Contribution margin 491,750 295,050 786,800

Less direct fixed costs:

Salaries 172,113 172,113 344,226 Other 59,010 59,010 118,020

Less allocated fixed costs:

Rent 12,710 9,619 22,329

Insurance 3,490 2,745 6,235

Cleaning 3,700 2,792 6,492

President's salary 75,020 57,162 132,182

Other 7,250 5,360 12,610

Net income / (loss) $158,457$ (13,751) $144,706

Determine whether Hiroole should discontinue the furniture line and the financial benefit (cost) of dropping it.

Net income without Home Office Furniture is $-

The companyshould drop/should not drop/should be indifferent between dropping or not dropping the Home Office Furniture product line.