The Litton Company has established standards as follows: Direct material: 3 pounds per unit @ $4 per pound = $12 per unit Direct labor: 2 hours per unit @ $8 per hour - $16 per unit Variable manufacturing overhead: 2 hours per unit @ $5 per hour - $10 per unit Actual production figures for the past year are given below. the company records the materials price variance when materials are purchased. the company applies variable manufacturing overhead to products on the basis of standard direct labor-hours. the materials price variance is: $400 U $400 F $600 F $600 U A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year: variable expenses total $1, 40,000 per year. Fixed expenses charged to the product total $90,000 per year. the company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall net operating income would: decrease by $20.000 per year increase by $20,000 per year decrease by $10,000 per year increase by $30,000 per year