The management of Tulip Corporation is considering dropping Product D. Data from the company's accounting system appear below: Sales $720,000 Variable expenses $374,000 Fixed manufacturing expenses $245,000 Fixed selling and administrative expenses $209,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $173,000 of the fixed manufacturing expenses, and $150,000 of the fixed selling and administrative expenses are avoidable if Product D is discontinued.

Required:

a. What would be the financial advantage (disadvantage) of dropping Product D?

b. Should the product be dropped?