Question: Kamera Kanon is considering eliminating Model AE1 from its camera line because of losses over the past quarter. The past three months of information for

 Kamera Kanon is considering eliminating Model AE1 from its camera line

Kamera Kanon is considering eliminating Model AE1 from its camera line because of losses over the past quarter. The past three months of information for model AE1 is summarized below: RM 250,000 Sales (1,000 units) Manufacturing costs: Direct materials Direct labor (RM15 per hour) Support Operating loss (140,000) (30,000) (100,000) (20,000) Support costs are 70% variable and the remaining 30% is depreciation of special equipment for model AE1 that has no resale value. Advice the management of Kamera Kanon whether they should eliminate Model AE1 from its product line or not. (10 marks)

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