Dropping a product Sanders Company recently developed an activitybased costing system and discovered that one of its
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Dropping a product Sanders Company recently developed an activitybased costing system and discovered that one of its products, SM5, does not cover the costs traced to it by the new cost system. Although the current sales price covers the direct material and direct labor costs, it does not cover the manufacturing support costs and customer support costs. The management team initially considered discontinuing production of SM5, but the marketing manager commented that no other local competitors produce SM5. Other than raising the price of SM5, what other actions might Sanders Company explore to increase profitability of SM5?
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