The following data is for Archery Unlimited, a maker of bows used by archery enthusiasts. All fixed costs are unavoidable regardless of the products offered, and Archery sells all the products it produces each year.

Beginner Intermediate Advanced

Unit Selling price $40 $200 $400

Unit variable cost $35 $ 80 $120

Total fixed cost $60,000 $200,000 $245,000

Annual volume 7,000 4,000 3,000

Required:

1.) Perform differential analysis to determine what will happen if the company drops the Beginner product.

2.) What would be your recommendation, regarding dropping of the Beginner product? Give a least 2 supporting reasons for your recommendation. 3.) Give 1 qualitative factor that would be a consideration in your decision.