The cost accountant for Bruin Manufacturing, Inc., has prepared the following analysis of the profitability of each of the firm$$s three products. All fixed costs are allocated costs and are not related to specific products.

Item $101$ Item $102$ Item $103$ Total

Sales $ $66,000\mathrm{.}00$ $ $68,800\mathrm{.}00$ $ $91,700\mathrm{.}00$ $ $226,500\mathrm{.}00$

Cost of goods sold $31,200\mathrm{.}0035,300\mathrm{.}0068,600\mathrm{.}00135,100\mathrm{.}00$

Gross profit $ $34,800\mathrm{.}00$ $ $33,500\mathrm{.}00$ $ $23,100\mathrm{.}00$ $ $91,400\mathrm{.}00$

Operating expenses $13,400\mathrm{.}0011,800\mathrm{.}0026,200\mathrm{.}0051,400\mathrm{.}00$

Net income $($loss$)$ $ $21,400\mathrm{.}00$ $ $21,700\mathrm{.}00$ $ $(3,100\mathrm{.}00)$ $ $40,000\mathrm{.}00$

Units sold $1,3201,7202,620$

Sales price per unit $ $50$ $ $40$ $ $35$

Variable cost of goods

sold per unit $ $22$ $ $18$ $ $23$

Variable operating

expenses per unit $ $6$ $ $5$ $ $7$

Management has been considering several options concerning the company$$s product mix to reduce or eliminate the loss on Item $103.$ The company$$s president has asked you to prepare an analysis of the effects on the company$$s net income before taxes for each of the following proposals. Consider each proposal independently; no changes would occur in the other products.

Required:

Calculate the net income or loss if item $103$ is dropped.

Calculate the net income or loss for Item $103$ if the sale price of Item $103$ is increased to $$40.$ Marketing analysis indicates that the increase in price will cause a decrease in sales of Item $103$ to $1,055$ units.

Calculate the net income or loss for Item $104$ if Item $103$ is dropped and the resulting plant capacity is used to produce a new product, Item $104.$ The department$$s marketing studies estimate that $1,520$ units could be sold at $$35$ each. The variable costs and expenses per unit of Item $104$ are estimated to be $$11$ per unit manufacturing cost and $$10$ per unit for operating expenses.