Chapter 25 H.W 2: Dropping Product Decision: D-Home Company manufacturers three items: D1, D2 and D3. The management is considering dropping item D3 because it has an operating loss. D1 D2 D3 Sales Revenues $ 52,000 $ 90,000 $ 75,000 Variable Costs (9,000) (62,000) (50,000) Contribution Margin 43,000 28,000 25,000 Fixed Cost (15,000) (23,000) (36,000) Net Income $ 28,000 $ 5,000 $ (11,000) Requirements: 1- Assume the fixed costs are unavoidable, Should D-Home drop item D3? 2- Assume 75% the fixed costs are avoidable, Should D-Home drop item D3?