Seven months ago, Naib Publishing Company published its first book (Book N). since then, Naib has added four more books to its product list (Books S, Q, X, and H). Management is considering proposals for three more new books, but editorial capacity limits the company to producing only seven books annually. Before deciding which of the proposes books to publish, management wants you to evaluate the performance of its existing book list. Recent revenue and cost data are as follows:

Projected data for the three proposed new books are: Book P, sales, $450,000, contribution margin, $45,000; Book T, sales, $725,000, contribution margin, ($25,200); and Book R, sales, $913,200, contribution margin, $115,500. Projected direct fixed costs are: Book P, $5,000; Book T, $6,000; Book R, $40,000.
Required
1. Analyze the performance of the five books that the company is currently publishing.
2. Should Naib Publishing Company eliminate any of its present products? If so, which one(s)?
3. Identify the new books you would use to replace those eliminated. Justify your answer.

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Nalb Publishing Company Product Profit and Loss Summary For the Year Ended December 31 Book N Book S Book QBk X Book H Totals 813800 $782,000 $634.200 $944,100 707000 3,881,100 Less variable costs Materials and binding Editorial services 325,520 $312,800 $190,260 $283,230 $212,100 51,323,910 73,420 57,205 25,120 101.472 151,056 113,120 71,380 130,208 162,760 50,682 80,700 370,905 620,976 697,305 196,164 Sales commissions Other selling costs Total variable costs Contribution margin Less total fixed costs 156,400 44,740 95,130 41,615 41,400 18,334 21,708 60,700 S740,550727260 $481.990 $651.440 $608020 $3,209.260 S 73,250 54,740 $152,210 $292,660 98,980 S 671,840 97.250 81240 89.610 100460680 451,240 IS 24,000 26,500) 62600 $192,200 16,300 220,600 Operating income loss Direct fixed costs induded in total fixed costs above 51,200 65,100 49.400 69,100 58,800 293,600