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 utility bill from $1,500 to $800. * All supervisors' salaries are avoidable. * If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000. * Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000. Required: -Prepare an analysis showing whether Product C should be eliminated.

Product 13 Total $100,0 0 $50,000 $20,000 $30,000 000 10002D000 60,000 ,,000 10,000 20,000 40,00020.0010,000 10,000 Variable expenses Fixed expenses: 5,000 Rent. Depreciation Utilities Supervisors' salaries.. Maintenance 1,500 1,800 1,500 3,000 900 10,000 3,000 2000 _5,000 5,80013.700 2,500 3,000 2,000 1,000 1,200 500 500 4,000 5,000 3,000 1 ,500 dministrative expenses.. Total lixed expenses.. Net operating income 0 13,500