Charter Sports Equipment manufactuOpen with premium, and regular treadmill. Sales and data for the past month follow: expense Treadmill Particulars Total Superior Premium Regular Sales $3,000,000 $900,000 $1,500,000 $600,000 Variable expenses 1,200,000 270,000 600,000 330,000 Contribution margin 1,800,000 630.000 900,000 270,000 Fixed expenses: Advertising, traceable 300,000 100,000 140,000 60,000 Depreciation expense 230,000 60,000 90,000 80,000 Salaries expense 350,000 120,000 130,000 100,000 Rent expense 200,000 60,000 100,000 40,000 General administrative 400,000 120,000 200,000 80,000 Total fixed expenses 1,480,000 460,000 660,000 360,000 Net operating income (loss) $ 320,000 $170,000 $ 240,000 $ (90,000) Management is concerned about the continued losses shown by the regular treadmill and wants a recommendation as to whether or not the line should be discontinued. The analysis of fixed expenses results the following details: i) The advertising expense represents advertisements that are specific to each product line and are avoidable if the line is dropped. ii) The depreciation expense represents depreciation on fixtures used to display the various product lines. Although the fixtures are nearly new, they are custom-built and will have no resale value if the octagonal line is dropped. iii) The salaries expense represents salaries paid to employees working directly on the product. All the employees working in octagonal would be discharged if the product line is dropped. iv) The rent expense represents rent on the entire building housing the company; it is allocated to the product lines on the basis of sales dollars. v) The general administrative expense represents the costs of accounting, purchasing, and general management, which are allocated to the product lines on the basis of sales dollars. Required: a) Should production and sale of the regular treadmill be discontinued? Show computations to support your answer. b) Recast the above data in a format that would be more usable to management in assessing the long-run profitability of the various product lines. Page 3 / 3 - + [Marks: 4+2=6]