Barton Beverages Inc. sells cases of bottled water at $25 each and has direct labor and materials costs of $10 for each case of water. Fixed costs per month are $30,000, and the accountants at Barton have reported to management that operating loss last month was ($7,500) when selling only 1,500 cases of bottled water. Barton is trying to decide whether to drop the bottled water from its product line since it has been operating at a net loss.
a. If Barton is not able to eliminate the fixed costs associated with the bottled water since they are allocated fixed costs, should the business drop the bottled water product line? Show all computations.
b. If Barton is able to eliminate $5,000 of the fixed costs associated with the bottled water since it they are direct fixed costs, should the business drop the bottled water product line? Show all computations.
c. If Barton is able to all of eliminate the fixed costs associated with the bottled water since they are direct fixed costs, should the business drop the bottled water product line? Show all computations

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The Answer of Barton Beverages Inc. sells cases of bottled water at $25 each and has direct labor and materials costs of $10 for each case of water. Fixed costs per month are $30,000, and the accountants at Barton have reported to management that operating loss last month was ($7,500) when selling only 1,500 cases of bottled water. Barton is trying to decide whether to drop the bottled water from its product line since it has been operating at a net loss.
a. If Barton is not able to eliminate the fixed costs associated with the bottled water since they are allocated fixed costs, should the business drop the bottled water product line? Show all computations.
b. If Barton is able to eliminate $5,000 of the fixed costs associated with the bottled water since it they are direct fixed costs, should the business drop the bottled water product line? Show all computations.
c. If Barton is able to all of eliminate the fixed costs associated with the bottled water since they are direct fixed costs, should the business drop the bottled water product line? Show all computations