M7-7 Analyzing Keep-or-Drop Decision [LO 7-2, 7-5] Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $45,000 as follows: Drafty Model $170,000 119,000 $ 51,000 42,000 $ 9,000 54,000 $ (45,000) Sales revenue Less: Variable costs Contribution margin Less: Direct fixed costs Segment margin Less: Common fixed costs Net operating income (loss) Eliminating the Drafty product line would eliminate $42,000 of direct fixed costs. The $54,000 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? Total Profit Decreases by

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