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A company has several product lines and is deciding whether to keep or drop Product A. The following information is available: If they drop Product
A company has several product lines and is deciding whether to keep or drop Product A. The following information is available: If they drop Product A, they will no longer need a supervisor for the Product A assembly line. They could discontinue the use of some old machinery if they drop Product A and this old machinery could be donated to a charity. The cost of the monthly advertising campaign for Product A would be ended if they drop Product A. The remaining fixed overhead costs in the factory will continue whether they decide to keep or drop Product A. Required: Select the items that are relevant in this decision, from the list below: (5 marks) Required: Select the items that are relevant in this decision, from the list below: marks) Supervisor salary for Product A Direct labour Direct materials | Monthly advertising costs for Product A Allocated common costs for company headquarters Original price of the old machinery Sales revenue Variable manufacturing overhead Fixed manufacturing overhead Book value of the old machinery
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