Problem 10-132 [LO2] Solution a) Lost contribution margin -13000   Less fixed expenses avoided:   Rent 1950     Utilities 920     Supervisors\' salaries 3,900     Maintenance 1,200        Administrative expenses 3,090 11060 Disadvantage of dropping Product C -1940 B) Since there is net disvantage of (1940) to dropping Product C , it should not be dropped. .

1. Problem 10-132 [LO2]
Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line
income data:
Solution
a) Lost contribution margin -13000 Less fixed expenses avoided: Rent 1950 Utilities 920
Supervisors' salaries 3,900 Maintenance 1,200 Administrative expenses 3,090 11060
Disadvantage of dropping Product C -1940 B) Since there is net disvantage of (1940) to
dropping Product C , it should not be dropped.