Marshall sells computer equipment and home office furniture. Currently, the furniture product line takes up approximately 50 percent of the companys retail floor space. The president of Marshall 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 the furniture line is dropped, salaries and other direct fixed costs can be avoided. Also, 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 $1,450,000 $1,116,500 $2,566,500

Less cost of goods sold 942,500 812,000 1,754,500

Contribution margin 507,500 304,500 812,000

Less direct fixed costs:

Salaries 182,700 182,700 365,400

Other 55,825 55,825 111,650

Less allocated fixed costs:

Rent 13,030 10,412 23,442

Insurance 3,190 2,391 5,581

Cleaning 3,580 2,875 6,455

Presidents salary 65,940 60,083 126,023

Other 6,220 5,034 11,254

Net income / (loss) $177,015 $(14,820) $162,195

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

Net income without Home Office Furniture is? $___________

The company should not drop - be indifferent about dropping or not dropping - or - should drop the Home Office Furniture product line?