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Fadiya Company produces three types of guitars: classical, acoustic, and electric. It is considering dropping the electric guitar line. The fixed expenses line is made
Fadiya Company produces three types of guitars: classical, acoustic, and electric. It is considering dropping the electric guitar line. The fixed expenses line is made up of common and direct fixed expenses. If the electric guitar line was dropped, $12,000 of the fixed costs are common and would remain. The remaining are direct fixed expenses. 1. What is the advantage/disadvantage amount of dropping the electric guitar line? Must show your work to get credit. 2. Should the company drop the electric guitar line? Explain what your answer to \#1 means and why you would keep or drop it
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