Grandma MeeMaw is retired and lives in sunny, tropical Florida where she doesn't get to see her grandkids as much as she would like. To fill her time, MeeMaw has started a small business focusing on coconuts.

Since MeeMaw isn't as young and spry as she used to be, she purchases whole coconuts in good condition from the neighborhood kids for an average of $5 per coconut. MeeMaw then produces canned coconut cream & milk, filtered coconut water, and souvenir coconut shells, although she views coconut Cream and Milk as her primary product. At the end of the recent season, MeeMaw evaluated her financial results:

	Cream & Milk	Water	Shells	Total
Sales revenues	$33,000	$8,800	$2,200	$44,000
Share of coconut cost	19,800	5,280	1,320	26,400
Processing expenses	6,600	990	660	8,250
Allocated overhead	4,400	660	440	5,500
Income (loss)	$ 2,200	$1,870	($   220)	$ 3,850

The cost of coconuts is assigned to each product line using the relative sales value of cream & milk, water, and shells (i.e., the percentage of total sales generated by each product). Processing expenses are directly traced to each product line. Overhead costs represent MeeMaw’s basic living expenses. These are allocated to each product line on the basis of processing expenses.

MeeMaw has a philosophy of every product line paying for itself and is determined to cut her losses on shells.

Should Grandma MeeMaw drop shells from her product offerings? Support your answer with computations.

Answer rating: 100% (QA)

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