LawnVillage sells home, and office furniture. Currently the home product line takes up approximately 50 percent of the company's retail floor space. The president ofLawnVillage is trying to decide whether the company should continue offering office furniture or concentrate on home furniture. Below is a product line income statement for the company. If office furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of home furniture can increase by15percent without affecting direct fixed costs. Allocated fixed costs are assigned based on relative sales.

Home Furniture Office Furniture Total

Sales 1435000 1104950 2539950

Less Cost of

goods sold 932750 803600 1736350

Contribution Margin 502250 301350 803600

Less Direct Fixed Cost:

Salaries 175788 175788 351576

Other 60270 60270 120540

Less Allocated Fixed Cost:

Rent: 13180 10156 23336

Insurance: 3040 2797 5837

Cleaning: 3760 3265 7025

Presidents Salary: 72640 55178 127818

Other: 6260 5052 11312

Net Income /(Loss) 167312 11156 156156

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

Net income without office furniture is $ . The Company (Should drop/ Should not Drop) Home office furniture line?