The management accountant for the Company Production ONE has prepared the following income statement for the most current year:

Product 1 Product 2 Product 3 Total

Sales $40,000 $35,000 $35,000 $100,000

Cost of goods sold 26,000 25,000 19,000 60,000

Contribution margin 14,000 10,000 16,000 40,000

Delivery and ordering costs 2,000 4,000 2,000 8,000

Allocated corporate costs 8,000 7,000 7,000 22,000

Corporate profit $4,000 $(1,000) $7,000 $10,000

Do you recommend discontinuing the product line of Product 2?

A.

None of these answers

B.

No, I would not recommend discontinuing Product 2 because this product line contributes $6,000 towards corporate costs and profits

C.

Yes, I would recommend discontinue in Product 2 because this product line contributes $(1,000) losses

D.

No, I would not recommend discontinuing Product 2 because this product line contributes $4,000 towards corporate costs and profits