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Mercer has three product lines in its retail stores: books, videos, and music. Results of the fourth quarter are presented below: Books Music Videos Total

Mercer has three product lines in its retail stores: books, videos, and music. Results of the fourth quarter are presented below:

Books Music Videos Total

Units sold

1,000 2,000 2,000 5,000

Revenue

$ 20,000 $ 40,000 $ 25,000 $ 85,000

Variable departmental costs

17,000 22,000 12,000 51,000

Direct fixed costs

1,000 3,000 2,000 6,000

Allocated fixed costs

7,000 7,000 7,000 21,000

Net income (loss)

$ (5,000 ) $ 8,000 $ 4,000 $ 7,000

The allocated fixed costs are unavoidable. Demand of individual products are not affected by changes in other product lines. What will happen to profits if Mercer discontinues the Books product line?

If Mercer discontinues the Books product line profit will select an option increasedecrease by $enter a dollar amount

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