Question

College Publishers produces three textbooks for various college campuses: Introductory Marketing, Introductory Management, and Introductory Accounting. Each book sells for $ 60. The manager of College Publishers is concerned that Introductory Marketing appears to be losing money. This is the most recent income report:
An analysis of the records reveals that printing, commissions, and shipping costs are traced directly to the product lines, while the remaining costs are allocated equally to the three product lines. Further analysis reveals the following:
1. The warehouse consists of 60,000 square feet of which 30,000 square feet are used for accounting books, 16,000 are used for management, and the remaining square feet are used to house marketing texts.
2. Depreciation 1 is depreciation on production equipment. During the past year, the production equipment operated a total of 2,500 hours, of which 1,250 hours were used to produce accounting texts, 750 hours were used for management texts, and 500 hours were used to produce marketing texts.
3. Depreciation 2, salaries, advertising, and miscellaneous costs, cannot be traced to any particular product line.
Required:
A. Prepare a product line income report.
B. Should College Publishers drop the marketing text? Why or why not?


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  • CreatedMarch 25, 2015
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