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The Patty Company manufactures and sells two lines of fly fishing rods. During the most recent accounting period, the Pro line and the Novice line
The Patty Company manufactures and sells two lines of fly fishing rods. During the most recent accounting period, the Pro line and the Novice line sold 18,200 and 5,200 units, respectively. The company's most recent 11 financial statements are shown below: Pro Novice Sales $1, 092,000 $624, 000 Less cost of goods sold: points Unit-level production cost 728,000 351, 000 00:45:47 Depreciation, production equipment 173, 000 130, 000 Gross margin $ 191,000 $143,000 Less operating expenses: variable selling and administrative costs 48, 000 169,000 Allocated Corporate-level facility expenses 43 , 680 43, 680 (fixed) Net income (loss) $ 99 , 320 $ (69, 680) Based on this information, the company should: Multiple Choice O It is impossible to determine with the given information. O Keep the Novice line because it contributes $143,000 to total profitability. O Keep the Novice line because it contributes $104,000 to total profitability. O Eliminate the Novice line because it is operating at a loss
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