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Nchiru Limited produces three products X, Y and Z which the following operating statement has been produced.
X (Shs.) Y (Shs.) Z (Shs. Sales 116,000 125,000 122,500 Total Costs 118,000 119,000 117,000 Net Profit / Loss (2,000) 6,000 5,500
The total costs comprise two-thirds variable and one-third fixed. The directors consider that as product X shows a loss it should be discontinued.
Required:
Based on the above cost data should product X be discontinued.
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