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Could someone answer for me this question. Thank you in advance * 70 City Star Company Ltd. manufactures three types of high-quality reading light-Basic, Classic

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* 70 City Star Company Ltd. manufactures three types of high-quality reading light-Basic, Classic and Deluxe. A draft budget for next year for the three products follows: Basic Classic Deluxe Total $ 000S 000S 000 $ 000 Revenue 90 80 240 Material 70 Labor 40 80 Variable Overhead Fixed Overhead 10 Total Costs 84 234 Profit/(Loss) (8) (14) 30 18 40 98 Fixed overheads are apportioned to each product line on the basis of direct labor hours. All the other costs (material, labor and variable overhead) are avoidable when the product line is discontinued. The directors are concerned about the viability of the company and are currently considering the cessation of both Basic and Classic ranges since both are apparently making losses Required: (a) If the directors close down only the Basic range, advise what effect this would have on total profit. (b) If the directors close down only the Classic range, advise what effect this would have on total profit. (e) Advice the directors of the best course of action required to maximize profit

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