Mercer has three product lines in its retail stores: books, videos, and music. Results of...
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Accounting
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
$
20,000
$
40,000
$
25,000
$
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)
$
(5,000
)
$
8,000
$
4,000
$
7,000
The allocated fixed costs are unavoidable. Demand of individual products are not affected by changes in other product lines. What will happen to profits if Mercer discontinues the Books product line?
If Mercer discontinues the Books product line profit will select an option increasedecrease by $enter a dollar amount
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