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The Mansfield Company manufactures and sells two lines of fishing rods. During the most recent accounting period, the Pro line and the Novice line
The Mansfield Company manufactures and sells two lines of fishing rods. During the most recent accounting period, the Pro line and the Novice line sold 19,600 and 6,600 units, respectively. The company's most recent financial statements are shown below: Sales Pro $1,176,000 Novice $792,000 Less cost of goods sold: Unit-level production cost 784,000 445,500 Depreciation, production equipment 194,000 165,000 Gross margin $ 198,000 $181,500 Less operating expenses: Unit-level selling and administrative costs 51,500 214,500 Corporate-level facility expenses (fixed) 47,040 47,040 Net income (loss) $ 99,460 $(80,040) Based on this information, the company should: Multiple Choice Eliminate the Novice line because it is operating at a loss. Keep the Novice line because it contributes $132,000 to total profitability. Keep the Novice line because it contributes $181,500 to total profitability. It is impossible to determine with the given information.
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