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Maggie's Music has three product lines: Vinyl Records, CD's, and 8-Track Tapes. Departmental operating income data for the second quarter are as follows: 1. Managers
Maggie's Music has three product lines: Vinyl Records, CD's, and 8-Track Tapes. Departmental operating income data for the second quarter are as follows: 1. Managers are concerned by operating losses. They are considering dropping the 8-Track Tape product line. Fixed costs assigned to each department include only fixed costs of that department. Total Fixed cost will not change if the company stops selling 8-Track Tapes. Would you recommend the elimination of 8-Track Tapes? Give supporting computations. 2. What if Maggie's Music can avoid $25,000 of fixed costs by dropping the 8Track Tapes? Would you recommend the elimination of 8-Track Tapes? Give supporting computations
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