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3. Totally Technology manufactures Cameras and Video Recorders. The company's product line income statement follows: Camera Video Recorder Total Sales revenue $300,000 $100,000 $400,000 Cost

3. Totally Technology manufactures Cameras and Video Recorders. The company's product line income statement follows:

Camera Video Recorder Total
Sales revenue $300,000 $100,000 $400,000
Cost of goods sold
Variable $75,000 $49,000 $124,000
Fixed $82,000 $28,000 $110,000
Total cost of goods sold $157,000 $77,000 $234,000
Gross profit $143,000 $23,000 $166,000
Marketing and administrative expenses
Variable $25,000 $28,000 $53,000
Fixed $32,000 $19,000 $51,000
Total marketing and administrative expenses $57,000 $47,000 $104,000
Operating income (loss) $86,000 (24,000)

$62,000

Management is considering discontinuing the Video Recorder product line. Accountants for the company estimate that discontinuing the Video Recorder line will decrease fixed cost of goods sold by $10,000 and fixed marketing and administrative expenses by $4,000.

Prepare analysis supporting your opinon about whether or not the video recorder product line should be discontinued.

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