$13$

decision making

review

$1-$ Mr$.$ Earl Pearl, accountant for Margie Knall Co$.,$ Inc., has prepared the following product$-$line income data:

The following additional information is available:

The factory rent of $$1,500$ assigned to Product C is avoidable if the product were dropped.

The company's total depreciation would not be affected by dropping C$.$

Eliminating Product C$)$ will reduce the monthly Sutility billffrom $$1,500$ to $$800.$

All supervisors' salaries are avoidable.

AVoid $70$

$S_{**}$ If Product $C$ is discontinued, the maintenance department will be able to reduce monthly expenses from $$3,000$ to $$2,000.$ Avoid $1000$ Avoid

$6$

Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries tota $$3,000-$

Required:

Prepare an analysis showing whether Product C should be eliminated.

$($dropped$)$