Dropping a Product Line Bryce Baseballs manufactures baseballs, baseball bats, and baseball gloves. The company is thinking of dropping baseball gloves as a product line. The following report was prepared by the accounting department:

Required:
1. Should the baseball glove line be dropped? Why or why not?
2. Interpretive Question: What qualitative factors should be considered in deciding whether to drop the baseball glove line?

Transcribed Image Text:

Baseball Baseball Baseballs Bats Gloves Total $105,000 $25,000 $ 370,000 (70,000) (12,000) (267,000) 55,000 $ 35,000 $13,000 (20,000) (10,000) (13,500) 35,000 $ 25,000 (17,500) (10,000) $ 17,500 $ 15,000 $ (500) (2,500) $ (3,000) $ 103,000 $ 59,500 (30,000) $ 29,500 (43,500) Sales revenues Variable costs Contribution margin Direct fixed costs Segment margin Indirect fixed costs $ 240,000 (185,000) Net income