Cassidy Products Inc.is considering eliminating Model EOS1 from its product line because of losses over the past quarter. The past three months of information for model EOS1 is summarized below:
Support costs are 70% variable and the remaining 30% is depreciation of special equipment for model EOS1 that has no resale value.
Should Cassidy eliminate Model EOS1 from its product line? Why or why not?
Definitions:
General Incorporation Law
A set of statutes established by a state that provides guidelines and regulations for the formation, operation, and dissolution of corporations.
For-Profit Corporation
A type of organization that is intended to operate with the goal of making a profit for its shareholders.
Owners
Individuals or entities that hold the legal right or title to property, assets, or intellectual property.
Not-For-Profit Corporation
A type of legal entity organized for purposes other than generating profit. Any surplus revenues are used to further its objectives rather than distributed to shareholders.
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