Swanton Company currently sells 3 products and details of revenues and costs are given below. The company is thinking of discontinuing the production of paper clip holders. However, because many customers buy the products as a set, Swanton estimates that the sales of the other two products will decrease by 20%.#
Desk
- Calendars Pen sets Paper-clip
- Holders
- Sales $280,000 $240,000 $24,000
- Variable costs 160,000 160,000 26,000
- Direct fixed costs 40,000 20,000 5,000
- Indirect fixed costs 30,000 40,000 6,000
What is the net benefit or net loss of dropping the production and sale of paper clip holders? Show your work.