OBrien Company sells two items, product X and product Y. The company is considering dropping product Y. It is expected that sales of product X will increase by 40% as a result. Dropping product Y will allow the company to cancel its monthly equipment rental costing $200 per month. The other existing equipment will be used for additional production of product X. One employee earning $500 per month can be terminated if product Y production is dropped. OBrien's other fixed costs are allocated and will continue regardless of the decision made. A condensed, budgeted monthly income statement with both products follows: Product X Product Y Total Sales $10,000 $ 8,000 $18,000 Direct materials 2,500 2,000 4,500 Direct labor 2,000 1,200 3,200 Equipment rental 300 2,600 2,900 Other allocated overhead 1,000 2,100 3,100 Operating income $4,200 $100 $ 4,300 Required: (8 marks) Prepare an incremental analysis to determine the financial effect of dropping product Y