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PROBLEM 2 While reviewing sales of gift shop items for the past six months, the owner of the Red Mill Inn prepared the analysis shown

PROBLEM 2
While reviewing sales of gift shop items for the past six months, the owner of the Red Mill Inn
prepared the analysis shown below.
KEY KITCHEN SWEAT
CHAIN TOWEL MUG T-SHIRT SHIRT
Sales $ 270.00 $ 644.40 $ 742.50 $ 3,828.00 $ 3,900.00
Variable costs 54.00 234.00 187.50 1,560.00 1,680.00
Contribution Margin $ 216.00 $ 410.40 $ 555.00 $ 2,268.00 $ 2,220.00
Fixed costs 250.00 250.00 250.00 400.00 400.00
Net Income $ (34.00) $ 160.40 $ 305.00 $ 1,868.00 $ 1,820.00
30% of the fixed costs of each item are avoidable. Show calculations to determine if
the key chain product is profitable or not.

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