Pantheon Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A product line income statement follows:
Pantheon Gaming
Income Statement
For the Year Ended December 31, 2014

Since the profit for accelerator devices is relatively low, the company is considering dropping this product line.
Required
a. Determine the annual impact on profit of dropping accelerator products.
b. Discuss the potential qualitative effects of discontinuing the sale of accelerator products?

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Audio Video Accelerators Total Sales Less cost of goods sold Gross margin Less other variable costs Contribution margin Less direct salaries Less common fixed costs: $1,200,000 $2,450,000 $2,400,000$6,050,000 4,235,000 1,815,000 142,000 1,673,000 395,000 1,435,000 470,000 1,015,000 69,000 946,000 175,000 730,000 53,000 417,000 155,000 2,070,000 330,000 20,000 310,000 65,000 Rent Utilities Depreciation Other administrative costs 25,830 9,430 12,710 170,970 $160,540 $ 552,060 11,970 4,370 5,890 79,230 25,200 9,200 12,400 166,800 31,400 63,000 23,000 31,000 417,000 744,000 Net income