Sound Ministers Inc. manufactures headphones. They have got 3 models of headphones which are a) Extra Bass Blaster b) Studio Mix and c) Master Sound. The sales of Extra Bass Blaster are $100,000, sales for Studio Mix are $50,000 while sales for Master Sound are the total of sales of both Extra Bass Blaster and Studio Mix. Direct Material cost for all the three models is $140,000 and the ratio in which they are used for 3 models is a) Extra Bass Blaster-35% b) Studio Mix-21% and c) Master Sound-44%. Direct Labour Cost is a) Extra Bass Blaster-$30,000 b) Studio Mix - $18,000 and c) Master Sound-$48,000. Variable overheads are 20% of the direct labor cost each for all the 3 models. Fixed overheads are a) Extra Bass Blaster-$5,000 b) Studio Mix - $6,000 and c) Master Sound-$10,000.

The Company is planning to discontinue the Studio Mix model and in that case the fixed overheads of Studio Mix will be divided equally amongst Extra Bass Blaster and Master Sound models.

Part 1

What is the total Profit of the company if Studio Mix is continued to be manufactured? Answer--> $ .

Part 2

What is the total Profit of the company if Studio Mix is discontinued to be manufactured? Answer--> $ .

Part 3

Should the company discontinue the production of Studio Mix? Write Yes or No .