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The management of The Corner Store operates a convenience store and is considering dropping toiletry products. If this line is dropped, the store estimates that
The management of The Corner Store operates a convenience store and is considering dropping toiletry products. If this line is dropped, the store estimates that sales of fountain drinks will drop by 7%, sales of snacks will drop by 2%, and sales in all other categories will drop by 8%. $1,000 of the store's overhead fixed costs are allocated to the toiletry line and will remain, even if the toiletry line is dropped. Below is the current income statement for the store, divided by segment: Fountain Toiletry Drinks Snacks Other Sales 9,000 14,000 19,000 42,000 Variable Costs (6,000) (4,000) (6,500) (16,500) Contribution Margin 3,000 10,000 12,500 25,500 Fixed Costs (7,000) (9,000) (8,000) (24,000) Net Operating Income (4,000) 1,000 4,500 1,500 What would be the total CHANGE in net income if the company dropped the toiletries line? If net income would decrease, use a negative sign ("-") to indicate a decrease
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