The Buse Sound, Ltd. has three divisions for selling music: Cassette, Vinyl, and CD. The divisions have the following revenues and expenses for June 2022:

	Cassette	Vinyl	CD
Revenues	$82,000	$430,000	$299,000
Variable Costs	$60,400	$173,800	$155,000
Fixed Costs:
Advertising	$4,000	$10,000	$15,000
Division manager's salary	$36,000	$38,000	$40,000
Other	$35,000	$91,300	$52,000
TOTAL	($53,400)	$116,900	$37,000

The management of The Buse Sound is considering the elimination of the Cassette Division. If the Cassette Division were eliminated, assume that all variable costs, Advertising costs, and the Division manager's salary could all be avoided. However, the 'Other' fixed costs are unavoidable and would be unaffected by the decision to drop the Cassette line.

Calculate the effect on The Buse Sound's profits as a whole if the Cassette line were to be eliminated. Enter your answer as a positive number if the effect is an increase in profits, and enter your answer as a negative number if the effect is a decrease in profits. Please enter your answer in whole dollars and include only numerals (i.e., do not include a $).

Answer rating: 100% (QA)

Impact on Profits by Eliminating Cassette Line Lets calcul... View the full answer