PROBLEM 3: Grandma MeeMaw is retired and lives in sunny, tropical Florida where she doesn't get to see her grandkids as much as she would like. To fill her time, Mee Mow has started a small business focusing on coconuts. Since MeeMaw isn't as young and spry as she used to be, she purchases whole coconuts in good condition from the neighborhood kids for an average of $5 per coconut. Mentaw then produces canned coconut cream & milk, filtered coconut water, and souvenir coconut shells, although she views coconut Cream and Milk as her primary product. At the end of the recent season, MooMaw evaluated her financial results: Cream & Milk Water Shells Total Sales revenues $33,000 $8,800 $2,200 $44,000 Share of coconut cost 19,800 5,280 1,320 26,400 Processing expenses 6,600 990 650 8,250 Allocated overhead 4.400 560 440 5.500 Income (oss) $2,200 $1,870 (5 220) $ 3,850 The cost of coconuts is assigned to each product line using the relative sales value of cream & milk, water, and shells (l.c., the percentage of total sales generated by each product). Processing expenses are directly traced to each product line. Overhead costs represent MeeMaw's basic living expenses. These are allocated to each product line on the basis of processing expenses. Mea Maw has a philosophy of every product line paying for itself and is determined to cut her losses on shells. a. Should Grandma MooMaw drop shells from her product offerings? Support your answer with computations Another souvenir artist in the neighboring community has offered to buy every shell as is* for $0.60 per shell (note: "as is" refers to the situation where MoeMaw incurs no other processing costs where the shells are concerned). Assume that MeeMaw expects to process the same number of coconuts each season. Should she sell shells to the artist? Support your answer with computations