1. Shine Bright Company has three product lines-D, E, and F. The following information is available:

	D	E	F
Sales	$60,000	$38,000	$26,000
Variable costs	36,000	18,000	12,000
Contribution margin	24,000	20,000	14,000
Fixed expenses	12,000	15,000	16,000
Operating income (loss)	$12,000	$5,000	$(2,000)

Shine Bright Company is thinking of dropping product line F because it is reporting an operating loss. Assuming fixed costs are unavoidable, if Shine Bright Company drops product line F and can use the space formerly used to produce product F to generate $17,000 of net income per year, what effect will this have on operating income? Should they drop Product F? **Show your work to support your answer.