torio.com/secured#lockdown Maps News M Gmail nabled: Final Exam i Saved Help Save & Exit ! This question will be sent to your instructor for grading- Luther Company, located in Largeville, Kansas (USA), is a retailer of durable, light-weight luggage products known for their high-quality and innovation. Recently, the firm conducted a relevant cost analysis of one of its product lines that has only two products, Kryptonite and Meteorite. Sales for Meteorite are decreasing, while purchase costs increasing. The firm is considering dropping the Meteorite product and only selling Kryptonite. Luther Company allocates fixed costs (both corporate and selling/administrative) to products based on sales revenue. When the president of the company saw the product-line income statements (presented below), he agreed that the Meteorite product should be dropped. If this is done, sales of Kryptonite are expected to increase by 15% next year; the firm's cost structure will remain the same. Kryptonite Meteorite Sales $ 200,000 Cost of goods sold (all variable) 90, 000 160,000 Gross margin 110, 090 160, 000 Operating Expenses : Fixed corporate costs 60, 000 90 , 000 Variable selling and administrative expenses 22 , 000 000 '65 Fixed selling and administrative expenses 12, 000 18 , 000 Total Operating Expenses 94, 000 Operating income (loss) $ 16,000 (000'2) $ Required: 1. Find the expected change in annual operating income by dropping the Meteorite product and selling only the Kryptonite product. 2. What strategic factors should be considered? Essay Toolbar navigation 70OF O 72 a e to search