Pantheon Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A product line income statement follows:
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Since the profit for accelerator devices is relatively low, the company is considering dropping this product line.
Required:
a. Determine the impact on profit of dropping accelerator products.
b. Discuss the potential qualitative effects of discontinuing the sale of accelerator products.