Royal Suppliers distributes beauty and barber supplies to retail stores, beauty salons, and barber shops. Early in 19X1, the company decided to develop and market its own line of shampoos and hair conditioners. It contracted with another firm to manufacture and package the products. After several months, the management of Royal Suppliers became quite concerned over the profitability of the new line. An analysis of operations is shown below.

Last month, sales were only $2,000. Several managers have suggested that this line of products should be discontinued.
1. What sales volume would be necessary for the company to break even on this line of products, assuming that the expense data given are reliable?
2. List the most important questions that should be asked by management to arrive at a decision about whether or not to discontinue this line of products.

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Average cost of products Average cost of containers and packaging Average freight in Average delivery costs (all variable) Sales commissions Advertising Variable Fixed Warehousing Variable Fixed Costs Percent of Selling per Month Price per Bottle 29260 10 30 10 5 $400 Fixed 400 Other Variable Fixed 600 2