The Following Data Is for Archery Unlimited,a Maker of Bows

question 50

Essay

The following data is for Archery Unlimited,a maker of bows used by archery enthusiasts.All fixed costs are unavoidable regardless of the products offered,and Archery sells all the products it produces each year.
$\begin{array}{lrrr}&\text { Beginner}&\text { Intermediate } & \text { Advanced }\\\text { Unit Selling price } & \$ 40 & \$ 200 & \$ 400 \\\text { Unit variable cost } & \$ 35 & \$ 80 & \$ 120 \\\text { Total fixed cost } & \$ 60,000 & \$ 200,000 & \$ 245,000 \\\text { Annual volume } & 7,000 & 4,000 & 3,000\end{array}$

(1)Perform differential analysis to determine what will happen to total profits if the company drops the Beginner product.
(2)Based on the analysis,what would be your recommendation to management regarding dropping of the Beginner product?

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Definitions:

Institution Building

The process of establishing and structuring new organizations or systems that fulfill societal, economic, or political needs.

Protestant Churches

Christian church denominations that originated from the Reformation, distinguished by their rejection of papal authority and emphasizing salvation through faith in Jesus Christ.

Asylums

Institutions designed for the care of the mentally ill, historically ranging from supportive treatment centers to places of isolation and neglect.

Utopian Communities

Idealized societies where people live together in harmony with shared principles and values, attempting to create a perfect social and political system.