a) Allocate the fixed costs between products A and B. Use direct labor dollars as the cost driver. allocation rate =$ per DL allocated costs for A=$ allocated costs for B=$ b) Compute the profit margins for products A and B : profit margin for A=$ profit margin for B=$ Enter negative numbers with a minus sign, i.e., a loss of $1,000 should be entered as 1000, not as (1000) or (\$1000). c) Should you drop product A or product B in the short term? Why? Keep both products -- both have positive contribution margin Drop product A it has negative profit margin Drop product A-- it has negative contribution margin Drop product A it has smaller contribution margin than product B