A company manufactures several products. You have the following data for three of these products:

$-------------------$ D Style......L Style......... P Style

Price per unit $------------$ $ $3\mathrm{.}80-$ $$6\mathrm{.}00.....$ $ $7\mathrm{.}50$

Manufacturing cost per unit: $--------------$

Direct materials : $-------$$ $1\mathrm{.}50****$ $ $1\mathrm{.}75*****$ $ $3\mathrm{.}00$

Direct labor : $*--------0\mathrm{.}50*******0\mathrm{.}50********0\mathrm{.}75$

Overhead : $---------1\mathrm{.}00******1\mathrm{.}00********1\mathrm{.}50$

Total : $----------$ $ $3\mathrm{.}00*******$$ $3\mathrm{.}25********$$ $5\mathrm{.}25$

Direct marketing costs:$-----$$ $75,000*****$$$775,000****$$$150,000$

Units sold : $----------100,000----250,000----50,000$

All three products are manufactured with other products in a large factory. A plantwide overhead rate of $200\%$ of direct labor cost is used to assign overhead costs to products. Overhead costs in this factory at a direct labor cost of $$500,000$ a year are as follows:

Supervision $ $130,000$

Indirect labor $120,000$

Pension and payroll taxes $150,000$

Indirect materials $180,000$

Power $70,000$

Heat and light $60,000$

Depreciation $50,000$

Taxes and insurance $160,000$

Miscellaneous $80,000$

$-----------------------$

Total $ $940,000$

You have the following additional information:

$1.$ Other products now use $$200,000$ a year in direct labor cost.

$2.$ factory supervision costs will be $$25,000$ less if total direct labor costs falls below $$300,000.$

$3.$ Indirect labor, indirect materials, and power costs are proportionately variable with direct labor cost.

$4.$ Pensions and payroll taxes are calculated at $20\%$ of total labor cost.

$5.$ heat and light, depreciation, and taxes and insurance are wholly fixed.

$6.$ Half of the miscellaneous overhead costs at normal volume are variable.

$7.$ Marketing and administrative costs other than those directly traceable to individual product lines amount to $$300,000.$ These costs would be the same even if none of these three products was marketed.

$8.$ The direct marketing costs of P Style include $$50,000$ to amortize the costs incurred to develop this product initially. This cost will be completely amortized three years from now.

REQUIRED:

A$.$ Based on the company$$s method of product costing, which of these products appear profitable?

B$.$ judging solely from the information provided in this problem, would you recommend that any of these three products be discontinued? Show your calculations.

C$.$ If any product appeared to be unprofitable in your answer to $($A$)$ but worth continuing in your answer to $($B$),$ under what circumstances would you consider withdrawing it from the market?