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Should hackerot camera eliminate model ae1 from product line

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Reference no: EM13496382

Hackerott Camera 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:

Sales (1,000 units) $250,000
Manufacturing costs:
Direct materials 140,000
Direct labor ($15 per hour) 30,000
Support 100,000
Operating loss ($20,000)

Support costs are 70% variable and the remaining 30% is depreciation of special equipment for model AE1 that has no resale value.

Should Hackerott Camera eliminate Model AE1 from its product line? Why or why not?

 

Reference no: EM13496382

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