Q.4 Abdulrahman Co. prepared the following product-line income data: Product Total A B Sales ......... $100,000 $50,000 $20,000 $30,000 Variable expenses 60,000 30,000 10,000 20.000 Contribution margin..... 40,000 20.000 10,000 10,000 Fixed expenses: Rent......... 5,000 2,500 1,000 1,500 Depreciation 6,000 3,000 1,200 1,800 Utilities........ 4,000 2.000 500 1,500 Supervisors' salaries 5,000 1,500 500 3,000 Maintenance .......... 3,000 1,500 600 900 Administrative expenses.. 10.000 3,000 2.000 5,000 Total fixed expenses...... 33,000 13,500 5.800 | 13,700 Net operating income $7,000 $6,500 $4,200 $(3,700) 1 The following additional information is available: * The factory rent of $1,500 assigned to Product C is avoidable if the product were dropped. The company's total depreciation would not be affected by dropping C. * Eliminating Product C will reduce the monthly utility bill from $1,500 to $800. * All supervisors' salaries are avoidable. * If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000. Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000. * Required: Prepare an analysis showing whether Product C should be eliminated. (1.5 Marks)