Reference no: EM132610503

The management accountant for the Chocolate S'more Company has prepared the following income statement for the most current year.

                                            Chocolate                    Other                    Candy                 Fudge             Total

Sales                              $40,000                    $25,000                $35,000             $100,000
Cost of goods sold                26,000                   15,000                 19,000                    60,000
Contribution margin               14,000                     10,000                16,000                   40,000
Delivery and ordering costs        2,000                    3,000                   2,000                      7,000
Rent (per sq. foot used)               3,000                   3,000                2,000                          8,000
Allocated corporate costs               5,000                  5,000                  5,000                       15,000
Corporate profit                       $4,000                     $(1,000)                $7,000                   $10,000

Question i. Do you recommend discontinuing the Other Candy product line? Why or why not?

Question ii. If the Chocolate product line had been discontinued, corporate profits for the current year would have decreased by what amount?