Richetti Village sells home, and office furniture. Currently the home product line takes up approximately 50 percent of the company's retail floor space. The president of Richetti Village 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 by 15 percent without affecting direct fixed costs. Allocated fixed costs are assigned based on relative sales. Home Furniture Office Furniture Total Sales $1,400,000 $1,078,000 $2,478,000 Less cost of goods sold 910,000 784,000 1,694,000 Contribution margin 490,000 294,000 784,000 Less direct fixed costs: Salaries 176,400 176,400 352,800 Other 58,800 58,800 117,600 Less allocated fixed costs: Rent 14,480 10,087 24,567 Insurance 3,360 2,631 5,991 Cleaning 4,200 3,140 7,340 President's salary 73,270 57.452 130,722 Other 7,350 5,326 12,676 Net income/(loss) $152,140 $(19,836) $132,304