Page Village sells home, and office furniture. Currently the home product line takes up approximately 50 percent of the

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Page Village sells home, and office furniture. Currentlythe home product line takes up approximately 50 percent of thecompany’s retail floor space. The presidentof Page Village is trying to decide whether the companyshould continue offering office furniture or concentrate on homefurniture. Below is a product line income statement for thecompany. If office furniture is dropped, salaries and other directfixed costs can be avoided. In addition, sales of home furniturecan increase by 16 percent without affecting direct fixedcosts. Allocated fixed costs are assigned based on relativesales.
HomeFurniture
OfficeFurniture
Total
Sales
Less cost of goods sold
Contribution margin
Less direct fixed costs:
Salaries
Other
Less allocated fixed costs:
Rent
Insurance
Cleaning
President’s salary
Other
Net income / (loss)
Determine whether Page Village should discontinue theoffice furniture line and the financial benefit (cost) of droppingit. (Round answer to 0 decimal places, e.g.5,275.)