Charter Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales

expenses for the past month follow:

$*$A common cost that is allocated on the basis of sales dollars

Management is concerned about the continued losses shown by the round trampolines and wants a

recommendation as to whether or not the line should be discontinued. The special equipment used to produce the

trampolines has no resale value. If the round trampoline model is dropped, the two line supervisors assigned to the

model would be discharged.

Required:

a$.$ Should the production and sale of the round trampolines be discontinued? You may assume that the

company has no other use for the capacity now being used to produce the round trampolines. 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 various product lines.