Camera Corner is considering eliminating Model A E2 from its camera line because of losses over the past quarter. The past three months of information for Model AE2 are summarized below:

Sales (1,000 units)………………$300,000

Manufacturing costs:

Direct materials………………......150,000

Direct labor ($15 per hour)……….60,000

Overhead………………………..100,000

Operating loss……………...........($10,000)

Overhead costs are 720% variable and the remaining 30% is depreciation of special equipment for model AE2 that has no resale value.

If Model AE2 is dropped from the product line, operating income will (indicate the amount and increase or decrease).

Answer rating: 100% (QA)

Determine product should be continue or drop Opera... View the full answer