Superior 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 for the year ended December 31, 2011 follows:

	Audio		Video		Accelerators		Total
Sales	$1,045,000		$2,255,000		$2,200,000		$5,500,000
Less COGS	575,000		1,240,000		1,870,000		3,685,000
Gross margin	470,000		1,015,000		330,000		1,815,000
Less other var costs	53,000		69,000		20,000		142,000
Contribution margin	417,000		946,000		310,000		1,673,000
Less direct salaries	155,000		175,000		65,000		395,000
Less common fixed costs:
Rent	11,970		25,830		25,200		63,000
Utilities	4,370		9,430		9,200		23,000
Depreciation	5,890		12,710		12,400		31,000
Other admin costs	79,230		170,970		166,800		417,000
Net income	$160,540		$552,060		$31,400		$744,000

Since the profit for accelerators is relatively low, the company is considering dropping this product line. What is the incremental effect of dropping accelerators?

a. ($310,000)

b. $31,400

c.	($245,000)

d.

$499,000

Answer rating: 100% (QA)

The loss if 310000 from the constrib... View the full answer