The income statement information for Waterford Ginseng Growers follows:

REQUIRED

A. Using the general decision rule, which product should the corporation emphasize? Support your answer with calculations.
B. Using the general decision rule, should the corporation drop Regular (assuming no changes in demand for other products)? Support your answer with calculations. Show how operating income would change if Regular were dropped.
C. At what point (in kg) would the managers be indifferent to dropping Regular? In other words, what is the breakeven point for Regular?
D. What other information do you want before you make a decision about whether to drop Regular?

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Regular Premium Royal Total 100 kg 100 kg 300 kg Sales units 100 kg $2,200 $1,600 $1,800 $5,600 Sales Variable costs 1,400 1,000 1,080 3,480 Contribution margin 800 600 720 2,120 725 520 Production line fixed costs* 640 1,885 Corporate costs (allocated)** 90 80 105 275 Total fixed costs 730 805 625 2,160 $ (205) $ 95 $ 70 $ (40) Operating income (loss)