The following data is for Archery Unlimited,a maker of bows used by archery enthusiasts.All fixed costs are unavoidable regardless of the products offered,and Archery sells all the products it produces each year.
$\begin{array}{lrrr}
&\text { Beginner}&\text { Intermediate } & \text { Advanced }\
\text { Unit Selling price } & \$ 40 & \$ 200 & \$ 400 \
\text { Unit variable cost } & \$ 35 & \$ 80 & \$ 120 \
\text { Total fixed cost } & \$ 60,000 & \$ 200,000 & \$ 245,000 \
\text { Annual volume } & 7,000 & 4,000 & 3,000
\end{array}$

(1)Perform differential analysis to determine what will happen to total profits if the company drops the Beginner product.
(2)Based on the analysis,what would be your recommendation to management regarding dropping of the Beginner product?

Question

The following data is for Archery Unlimited,a maker of bows used by archery enthusiasts.All fixed costs are unavoidable regardless of the products offered,and Archery sells all the products it produces each year. 
 $\begin{array}{lrrr}
&\text { Beginner}&\text {  Intermediate } & \text { Advanced }\
\text { Unit Selling price } & \$ 40 & \$ 200 & \$ 400 \
\text { Unit variable cost } & \$ 35 & \$ 80 & \$ 120 \
\text { Total fixed cost } & \$ 60,000 & \$ 200,000 & \$ 245,000 \
\text { Annual volume } & 7,000 & 4,000 & 3,000
\end{array}$
 
(1)Perform differential analysis to determine what will happen to total profits if the company drops the Beginner product.
(2)Based on the analysis,what would be your recommendation to management regarding dropping of the Beginner product?

Quizplus · Accepted Answer

The Answer of The following data is for Archery Unlimited,a maker of bows used by archery enthusiasts.All fixed costs are unavoidable regardless of the products offered,and Archery sells all the products it produces each year. 
 $\begin{array}{lrrr}
&\text { Beginner}&\text {  Intermediate } & \text { Advanced }\
\text { Unit Selling price } & \$ 40 & \$ 200 & \$ 400 \
\text { Unit variable cost } & \$ 35 & \$ 80 & \$ 120 \
\text { Total fixed cost } & \$ 60,000 & \$ 200,000 & \$ 245,000 \
\text { Annual volume } & 7,000 & 4,000 & 3,000
\end{array}$
 
(1)Perform differential analysis to determine what will happen to total profits if the company drops the Beginner product.
(2)Based on the analysis,what would be your recommendation to management regarding dropping of the Beginner product?

The Following Data Is for Archery Unlimited,a Maker of Bows