Suppose that Blowing Sand Company also produces the Drafty model fan, which currently has a net loss of $43,000 as follows:

Eliminating the Drafty product line would eliminate $18,000 of direct fixed costs. The $50,000 of common fixed costs would be redistributed to Blowing Sand€™s remaining product lines. Will Blowing Sand's net operating income increase or decrease if the Drafty model is eliminated? By how much?

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Drafty Model $150,000 125,000 $25,000 18,000 $ 7,000 50,000 $ (43,000) Sales revenue Less: Variable costs Contribution margin Segment margin Net operating income (loss) Less: Direct fixed costs Less: Common fixed costs