Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line:

Sales $ 2,850,000

Less: Variable expenses 1,339,500

Contribution margin 1,510,500

Less: Fixed expenses:

Wages $ 1,026,000

Insurance on inventory 57,000

Advertising 627,000

1,710,000

Net operating income (loss) $ (199,500)

Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to be created elsewhere for a long-term employee currently earning an annual salary of $85,500.

Required: Calculate the increase or decrease in the operating income in both alternatives.