Hackerott Camera is considering eliminating Model AE1 from its camera line because of losses over the past quarter.The past three months of information for model AE1 is summarized below:
Support costs are 70% variable and the remaining 30% is depreciation of special equipment for model AE1 that has no resale value.
Should Hackerott Camera eliminate Model AE1 from its product line? Why or why not?
Definitions:
Wage Rate
The wage rate refers to the standardized amount of compensation a worker receives per unit of time, such as an hour or year, for their labor.
Variable Input
A variable input is a resource or factor of production whose quantity can be changed easily by a firm in response to changes in production volume or demand, such as labor or raw materials.
Marginal Product
The extra production achieved by the use of an extra unit of a specific input while keeping other inputs unchanged.
Resource Demand Curve
A graph showing the relationship between the price of a resource and the quantity of that resource demanded by firms.
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