Jack Office Ltd makes and sells two lines of office chairs: standard and deluxe. The company has experienced operating losses during the last two months. Jack Office is considering dropping one of the office chair product lines. Last month's financial data is below. Fixed costs are allocated to product lines based on percent of retail store space; fixed costs are unavoidable and will not change if one product line is dropped. Standard Deluxe Sales Revenue $35,000 $65,000 Variable Expenses $15,000 $55,000 Contribution Margin $20,000 $10,000 Fixed Expenses $16,000 $27,000 Operating Income/(Loss) $4,000 $(17,000) Required: 1. Should Jack Office drop the Deluxe Chair product? Why or why not? 2. Assume now that Jack Office can avoid $24,000 fixed expenses if it drops Deluxe Chairs. What is your decision?