The following operating data was reported by Acer Sports for the month of June, during which 1,000 rackets and 4,000 packs of racquetballs were produced and sold: Acer Sports is concerned since this is the sixth consecutive month that the Ball Packs Has reported an operating loss. Since the company feels that it is not possible to increase the unit selling price, that it should consider dropping the Ball Packs product line.Answer the following questions:
a. Should companies eliminate segments or product lines if they are unprofitable? Why?
b. In the case of Acer Sports, prepare an analysis to support whether the Ball Packs line should be dropped or not. Assume that none of the fixed costs can be eliminated.
c. Should the Ball Packs product line be dropped?
d. If all $9,200 of Ball Packs fixed costs can be eliminated, should the Ball Packs product line be discontinued?

Question

The following operating data was reported by Acer Sports for the month of June, during which 1,000 rackets and 4,000 packs of racquetballs were produced and sold:  Acer Sports is concerned since this is the sixth consecutive month that the Ball Packs Has reported an operating loss. Since the company feels that it is not possible to increase the unit selling price, that it should consider dropping the Ball Packs product line.Answer the following questions: 
a. Should companies eliminate segments or product lines if they are unprofitable? Why?
b. In the case of Acer Sports, prepare an analysis to support whether the Ball Packs line should be dropped or not. Assume that none of the fixed costs can be eliminated.
c. Should the Ball Packs product line be dropped? 
d. If all $9,200 of Ball Packs fixed costs can be eliminated, should the Ball Packs product line be discontinued?

Quizplus · Accepted Answer

The Answer of The following operating data was reported by Acer Sports for the month of June, during which 1,000 rackets and 4,000 packs of racquetballs were produced and sold:  Acer Sports is concerned since this is the sixth consecutive month that the Ball Packs Has reported an operating loss. Since the company feels that it is not possible to increase the unit selling price, that it should consider dropping the Ball Packs product line.Answer the following questions: 
a. Should companies eliminate segments or product lines if they are unprofitable? Why?
b. In the case of Acer Sports, prepare an analysis to support whether the Ball Packs line should be dropped or not. Assume that none of the fixed costs can be eliminated.
c. Should the Ball Packs product line be dropped? 
d. If all $9,200 of Ball Packs fixed costs can be eliminated, should the Ball Packs product line be discontinued?

The Following Operating Data Was Reported by Acer Sports for the Month