2. Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line income data: Total $100,000 60,000 40.000 $50,000 30,000 20.000 Product B $20,000 10,000 10,000 S 30,000 20.000 10,000 1,000 1,200 Sales. Variable expenses.. Contribution margin Fixed expenses: Rent ... Depreciation....... Utilities............. Supervisors' salaries ... . Maintenance.... Administrative expenses....... Total fixed expenses.... ... Net operating income ........ 1,500 1,800 1,500 3,000 500 500 5,000 6.000 4.000 5,000 3,000 10,000 33,000 $ 7.000 2,500 3,000 2,000 1,500 1,500 3,000 13,500 $ 6,500 600 900 2.000 5,800 $4,200 5,000 13,700 $( 3.700) 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