Question: Johnson and Johnson is trying to decide whether to keep each of its two products lines-Product Line A and Product Line B. Following are

Johnson and Johnson is trying to decide whether to keep each of

Johnson and Johnson is trying to decide whether to keep each of its two products lines-Product Line A and Product Line B. Following are the operating results for the current year: Sales Variable costs A B Total $390,000$410,000$800,000 190,000 350,000 540,000 Contribution margin$200,000 $ 60,000 $260,000 Fixed costs Profit 250,000 $ 10,000 The total fixed costs of $250,000 include common fixed costs of $120,000. The two product lines have the same amount of segment-specific fixed costs. Required: For each of the following scenarios, determine which product line(s) the company should keep: a. The company wants to maximize its short-term profit. b. The company wants to maximize its long-term profit. Explain the reasoning in detail. (15 points)

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