1. MTG Company has three product lines. The company is considering dropping Product 1 because it has been operating at a loss. The following summarizes the income of the three product lines. Prepare a report explaining whether the Product line should or should not be dropped. Include in your report the other factors that should be considered to support your quantitative analyses.

	Product 1		Product 2		Product 3		Total
Sales	$25,000		$22,000		$37,000		$84,000
Less: Variable Costs	20,000		10,000		19,000		49,000
Contribution Margin	$ 5,000		$12,000		$18,000		$35,000
Less: Fixed Costs
Traceable	3,000		5,000		6,000		14,000
Allocated	4,000		3,000		5,000		12,000
Net Income	($ 2,000)		$ 4,000		$ 7,000		$ 9,000