Analyze the effect of profit of dropping accessories. then write a paragraph explaining the role of common costs in your analysis and how allocation of common costs can lead to the cost allocation death spiral.

led cost that is incre e of a fixed cost that is not incremen EXERCISE 7-2. ILO 1] Jordan Walken owns an Washington. Her accountant has prep below. (Jordan's two lines are music devices the accountant allocated all common assistants, utilities, and other common costs based on relative sales (rounded eason: "Each product line needs to cover its share of common costs d operates an electronics store in Seattle duct line income statement that is reproduced and accessories.) In preparing the income statement s0) nethod (27o) ared a pro costs, including rent, Jordan's salary and the salary of her two In light of this report, Jordan is considering eliminating accessories and concentrating solely on the sale of music devices (although, she does not expect an increase in music device sales) only Music Devices Accessories lo Total Sales $970,000 705,000 265,000 43,000 $150,000 $1,120,000 825,000 295,000 Cost of merchandise Gross margin Rent Salaries Utilities 30,000 50,000 32,000 7,000 6,000 293,000 $ 2,000 6,000 1,000 41,000 11,000) 252,000 Total $13,000 Income before taxes Analyze the effect on profit of dropping accessories. Then write a paragraph explaining the role of common costs in your analysis and how allocation of common costs can lead to the cost allocation death spiral. REQUIRED