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A tennis equipment company produces two lines of tennis shoes, Professional and Amateur. Income statement data for the tennis shoes is shown below. Professional Amateur
A tennis equipment company produces two lines of tennis shoes, Professional and Amateur. Income statement data for the tennis shoes is shown below. Professional Amateur Total Sales $ 550,000 $ 750,000 $ 1,300,000 Variable costs 275,000 400,000 675,000 Direct fixed costs 100,000 300,000 400,000 Allocated fixed costs 37,500 112,500 150,000 Operating income $ 137,500 $ (62,500) $ 75,000 Since the Amateur line shows a loss, the company is considering eliminating this line of tennis shoes. Based on the data provided, should the company drop the Amateur tennis shoe line
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