AMF produces a catalog that is placed in airline seatbacks during international flights. Passengers typically skim the catalog during flights and can buy selected merchandise from flight attendants, duty and tax free, while over international waters. Below is a report for a recent period: Total Beverages Jewelry Electronics Sales $2,600,000 $1,400,000 $500,000 $700,000 Variable expenses 1,635,000 980,000 200,000 455,000 Contribution margin $965,000 $420,000 $300,000 $245,000 Fixed expenses 900,000 300,000 300,000 300,000 Income (loss) $65,000 $120,000 $ 0 ($55,000) The fixed expense is the amount paid for printing the catalog and paying the airline to include the item in seatbacks. Management is evaluating discontinuing the sale of electronics products. Fixed costs will not change; however, jewelry sales are expected to increase by 30%.Determine if overall income will be improved if the sale of electronics products is ceased.
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- Submitted On 20 Feb, 2018 05:32:46