A company has three product lines: basic, deluxe, and limited. Total fixed costs are allocated based on direct labor hours and remain unchanged in the short term.

Basic

Deluxe

Limited

Units sold

10,000

7,000

2,500

Price per unit

$10

$13

$21

Total variable costs

$80,000

$70,000

$37,500

Total fixed costs

$22,000

$13,000

$6,000

• Based on the information above, which product lines, if any, should be discontinued due to lack of profitability?
• A.
• Only the limited line should be discontinued.
• B.
• Only the basic line should be discontinued.
• C.
• Only the deluxe and limited lines should be discontinued.
• D.
• None of the product lines should be discontinued.