Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line income data: The following additional information is available:
* The factory rent of $1,500 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 $1,500 to $800.* All supervisors' salaries are avoidable.* If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.* Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000.Required:
Prepare an analysis showing whether Product C should be eliminated.

Question

Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line income data:  The following additional information is available:
* The factory rent of $1,500 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 $1,500 to $800.* All supervisors' salaries are avoidable.* If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.* Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000.Required:
Prepare an analysis showing whether Product C should be eliminated.

Quizplus · Accepted Answer

The Answer of Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line income data:  The following additional information is available:
* The factory rent of $1,500 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 $1,500 to $800.* All supervisors' salaries are avoidable.* If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.* Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000.Required:
Prepare an analysis showing whether Product C should be eliminated.

Mr Earl Pearl, Accountant for Margie Knall Co