The management of Therriault Corporation is considering dropping product U51Y. Data from the company's accounting system appear below:

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $260,000 of the fixed manufacturing expenses and $130,000 of the fixed selling and administrative expenses are avoidable if product U51Y is discontinued.

Required: What is the net operating income (loss) by keeping the product? What would be the effect on the company's overall net operating income (loss) if product U51Y were dropped? Should the product be dropped?

Sales. Variable expenses ....... Fixed manufacturing expenses. Fixed selling and administrative expenses............ $980,000 $568,000 $314,000 $196,000