6.45 Product-line Decisions, gross approach (LO2, Appendix B). Pete's Pets is an indepen- dent pet store located in Hoboken, New Jersey. Pete collects and reports operating data by "product line," with all revenues and costs being placed into one of three summary categories: (1) dogs, (2) cats, (3) birds & fish. For the most recent year of operations, Pete reported the following results: Dogs Cats Birds & Fish Total Revenue $218,000 $142,500 $92,500 $453,000 Variable costs 87,200 42.750 46,250 176,200 Contribution margin $130.800 $99,750 $46,250 $276,800 Traceable fixed costs 31,500 22.600 27,500 81,600 Common fixed costs 35,000 35.000 35.000 105.000 Profit $64,300 $42.150 ($16,250) $90,200 Common fixed costs relate to rent. Since dogs, cats, and birds and fish each use one-third of the available space, Pete allocates these costs equally among the three pet-related While pleased with his overall profit and the profit on dogs and cats, Pete is con- cerned about the loss on birds and fish. He is thinking about discontinuing the birds and fish product line, and using the space to expand his offering of dogs and cats and their related supplies. Pete believes this option would increase both dog and cat reve- nue by 12%; however, it would also increase dog-related traceable fixed costs by $12,500 and cat-related traceable fixed costs by $8,000. Required: a. Using the gross approach, evaluate whether Pete should discontinue the birds and fish product line. b. For decision-making purposes, do you believe Pete needs more detailed information than is currently provided in his financial statements? Why