Question Two: Amman Furniture Manufacturing Company produces and sells two types of furniture. home furniture and office furniture. The income statement for 2021 is presented below by JODS: Sales Variable costs Home furniture Office furniture Company 1,000,000 (600.000) 400,000 700,000 1,700,000 (420,000) (1,020,000) 280.000 680.000 Contribution margin Direct fixed costs: Salaries for production managers (200.000) (200,000) (400,000) Common fixed costs: Insurance (14.706) (10.294) (25.000) Cleaning (3.529) (2.471) (6,000) Company's President salary (76,470) (53,530) (130,000) Net income JOD 119,000 JOD 105,295 JOD 13,705 The office furniture product line takes up approximately 50% of the company's retail floor space. The president of the company is trying to decide whether the company should stop producing office furniture and just concentrate on home furniture. The Cost Accounting Manager provided the President with the following information to help him make the decision: If the company stopped producing office furniture, direct fixed costs will be avoidable costs. If the company stop producing office furniture, sales and cost of sales of home furniture will increase by 20% without no effect on fixed costs. Common fixed costs are allocated based upon number of employees and this allocation is considered arbitrary and inaccurate to split the common costs between the two production lines.