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    Mercer has three product lines in its retail stores

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    4. Mercer has three product lines in its retail stores: books, videos, and music. Results of the fourth quarter are presented below:
    Books Music Videos Total
    Units sold 1,000 2,000 2,000 5,000
    Revenue $22,000 $40,000 $23,000 $85,000
    Variable departmental costs 17,000 22,000 12,000 51,000
    Direct fixed costs 1,000 3,000 2,000 6,000
    Allocated fixed costs 7,000 7,000 7,000 21,000
    Net income (loss) $ (3,000) $ 8,000 $ 2,000 $ 7,000

    The allocated fixed costs are unavoidable. Demand of individual products are not affected by changes in other product lines.

    Instructions
    Should Mercer eliminate the Books product line? (10 points)

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    https://brainmass.com/business/accounting/mercer-has-three-product-lines-in-its-retail-stores-381086

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    4. Mercer has three product lines in its retail stores: books, videos, and music. Results of the fourth quarter are presented below:
    Books Music Videos Total
    Units sold 1,000 2,000 2,000 5,000
    Revenue $22,000 $40,000 $23,000 $85,000
    Variable departmental ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer whether Mercer should eliminate the Books product line.

    $2.19

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