Luther Company, located in Largeville, Kansas $($USA$),$ is a retailer of durable, light$-$weight luggage products known for their high$-$quality and innovation. Recently, the firm conducted a relevant cost analysis of one

of its product lines that has only two products, Kryptonite and Meteorite. Sales for Meteorite are decreasing, while purchase costs increasing. The firm is considering dropping the Meteorite product and only

selling Kryptonite. Luther Company allocates fixed costs $($both corporate and selling$/$administrative$)$ to products based on sales revenue. When the president of the company saw the product$-$line income

statements $($presented below$),$ he agreed that the Meteorite product should be dropped. If this is done, sales of Kryptonite are expected to increase by $15\%$ next year; the firm's cost structure will remain the

same.

Required:

Find the expected change in annual operating income by dropping the Meteorite product and selling only the Kryptonite product.

What strategic factors should be considered?