A car manufacturer produces three different versions of their compact car: base model, premium, and super-deluxe. A simplified profit/loss statement for the plant is below. Corporate overhead (rent, general and administrative expense, etc.. is allocated equally among the three product versions. At the end of the quarter, company managers evaluate the profitability of each version to see if any should be discontinued. What would you recommend and why?

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Premium Super Total Base Model Delux $240,000 s105,000 S525,000 Net Sales $180,000 $135,000 S82,500 S105,000 S322,500 Variable Costs $60,000 $60,000 S60,000 $180,000 Corporate Overhead Contribution $15,000 (S37,500) S22,500 $45,000 to Profit