Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the followin

Question

Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line income data:

Product

The following additional information is available:

The factory rent of $1,120 assigned to Product C is avoidable if the product were dropped.

The company's total depreciation would not be affected by dropping C.

Eliminating Product C will reduce the monthly utility bill from $1,600 to $900.

All supervisors' salaries are avoidable.

If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $2,880 to $2,100.

Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $1,000.

Required:

Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line income data:

Explanation / Answer

1. Calculate the advantage or disadvantage in dropping Product C. (Input the amount as a positive value. Omit the "$" sign in your response.) Disadvantage in dropping product C = $ 1200 2. Should the product be dropped? No

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