2.85 points Agnew Manufacturing produces and sells three models of a single product, Standard, Superior, and DeLuxe, in a local market and in a regional market. At the end of the first quarter of the curent year, the tollowling income statement (in thousands of dollars) has been prepared Total Local Regional Gales revenue Cost of gaads sold Gross margin Marketing costs Administratv costs Total marketing and administrative $7,000 ,000 $1,000 390 270 72 42 $ 798600 $ 342 6,060 740 630 4,650 350 060 240 eco 94 Operating prohts Management has expressed special concern with the regional market because of the extremely poor returm on sales. This market was entered a year ago because of excess capacity. It was originally belleved that the retum on sales would improve with time, but after a year, no noticeable improvement can be seen frorm the results as reported in the preceding quarterly staterment. In attempting to decide whether to eliminate the regional market, the following information has been gathered: Products Sales revenue variable manufacturing costs s percentage of sales revenue Variable marketing costs as a percentage of sales revenue $3,000 $2,400 52,400 60% 70% Product Salcs by MarkctsLocalRcgional Standar S2100 1,800 1.800 $600 600 DeLuxe All administrative costs and fixed manufacturing costs would not be affected by eliminating the regional market. Marketing costs that are not listed above as variable are fixed for the periad and separable by market. Fixed marketing costs assigned to the regional market would be saved if that market were eliminated