Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is available regarding its canoe segment.

MARINETTE COMPANY

Income Statement?Canoe Segment Sales $ 2,100,000 Variable costs Direct materials $ 470,000 Direct labor 520,000 Variable overhead 320,000 Variable selling and administrative 210,000 Total variable costs 1,520,000 Contribution margin 580,000 Fixed costs Direct 395,000 Indirect 320,000 Total fixed costs 715,000 Net income $ (135,000 )

1. If canoes are discontinued, calculate the net income lost or gained.

2. Should management discontinue the manufacturing of canoes?