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1]. 1. Brewer Corp. is considering dropping its talking dog product line due to continuing losses. Revenue and cost data for the talking dog line

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1]. 1. Brewer Corp. is considering dropping its talking dog product line due to continuing losses. Revenue and cost data for the talking dog line for the past year follow: Sales {20,000 units) $300,000 Variable costs 130,000 Contribution margin 120,000 Fixed costs 140,000 Ifthe talking dog is discontinued, then Brewer could avoid $110,000 per year in fixed costs. {1} What is the change in annual operating income from discontinuing the talking dog product line? {2} Assuming all other conditions stay the same, at what level of annual sales of the talking dog {in units} should Brewer he indifferent at to discontinuing or continuing the product line? {3} Suppose that if the talking dog is dropped, the production and sale of other products would increase so as to generate a $15,000 increase in the contribution margin received from the other products. [fall other conditions are the same, what is the change in annual operating income from dropping the talking dog

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