Superior gaming a computer enhancement company has three

Reference no: EM13591859

Superior Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A product line income statement for the year ended December 31, 2011 follows:

	Audio	Video	Accelerators	Total
Sales	$1,045,000	$2,255,000	$2,200,000	$5,500,000
Less COGS	575,000	1,240,000	1,870,000	3,685,000
Gross margin	470,000	1,015,000	330,000	1,815,000
Less other var costs	53,000	69,000	20,000	142,000
Contribution margin	417,000	946,000	310,000	1,673,000
Less direct salaries	155,000	175,000	65,000	395,000
Less common fixed costs:
Rent	11,970	25,830	25,200	63,000
Utilities	4,370	9,430	9,200	23,000
Depreciation	5,890	12,710	12,400	31,000
Other admin costs	79,230	170,970	166,800	417,000
Net income	$160,540	$552,060	$31,400	$744,000

Since the profit for accelerators is relatively low, the company is considering dropping this product line. What is the incremental effect of dropping accelerators?

Reference no: EM13591859

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Superior gaming a computer enhancement company has three

Reference no: EM13591859

Reference no: EM13591859

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