Question
PART (20 minutes) Az Omar, president of a publishing company, is analyzing the firm's financial statements for ne past year. The firm publishes magazines
PART (20 minutes) Az Omar, president of a publishing company, is analyzing the firm's financial statements for ne past year. The firm publishes magazines weekly, monthly, and quarterly. Data for the past year are as follows: Sales Quarterly Magazine Monthly Weekly Magazine $125,000 $175,000 $200,000 Total Magazine $500,000 Variable costs 65,000 70,000 80,000 215,000 Depreciation of special equipment 7.500 8,750 11,250 27,500 Salary of editor 20,000 20,000 22,500 62,500 Common costs allocated (based on sales) 43,750 61,250 70,000 175,000 Net income (loss) $(11,250) $15,000 $16,250 $20,000 The equipment used is very specialized and has no resale value if its use is discontinued. Omar is considering discontinuing the quarterly magazine because he claims it is decreasing the company's profitability. Required Should the quarterly magazine be discontinued? Support your answer with the necessary calculations.
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