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5 management accountant for Martha's Book Store has prepared the following income statement for the most current year. Sales Cost of goods sold Contribution margin
5 management accountant for Martha's Book Store has prepared the following income statement for the most current year. Sales Cost of goods sold Contribution margin Delivery processing Other Traceable Fixed Costs Allocated corporate costs Corporate profit Cookbook $ 60,000 $36,000 A) B) $ 24,000 $ 18,000 $ 2,000 $ 7,000 $ (3,000) Travel $100,000 $ 65,000 $ 35,000 $ 21,000 $ 1,000 $ $ 6,000 7,000 Classics $40,000 $20,000 $20,000 $ 8,000 $ 3,000 $ 7,000 $ 2,000 Total $200,000 $121,000 $ 79,000 $ 47,000 $ 6,000 $ 21,000 $ 5,000 Based on this information, Should the cookbook product line be eliminated? Why or why not? Should a new cookbook product line, with the exact revenues and costs of the current cookbook (with the exception of an additional $3,000 of fixed costs that would be incurred) be added? Why or why not?
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