Problem $1$

Sierra Company sells two items, product Standard and product Premium. The company is considering dropping product Premium. It is expected that sales of product Standard will increase by $50\%$ a s a result. Dropping product Premium will allow the company to cancel its monthly equipment rental costing $$250$ per month. The other existing equipment will be used for additional production of product Standard. One employee earning $300$ per month can be terminated if Premium production is dropped. Sierra's other fixed costs are allocated and will continue regardless of the decision made. A condensed, budgeted monthly income statement with both products follows:

$\backslash$table$[[,$Standard,Premium,Total$],[$Sales$,$$$12,000,$$$10,000,$$$22,000$