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Diversified Products, Inc., has recently acquired a small publishing company that offers three books for sale -a cookbook, a travel guide, and a handy speller. Each book sells for $12. The publishing company's most recent monthly income statement is given below Product Line Travel Total Company Cookbook Guide Speller $ 310,000 $ 94,000 $154,000 $ 62,000 Sales Expenses Printing costs Advertising General sales Salaries Equipment depreciation Sales commissions General administration Warehouse rent Depreciation-office facilities 104,000 29,000 38,000 13,700 5,640 35,00020,000 2,100 9,400 42,600 14,200 3,760 1,200 20,500 9,240 9,200 2,100 15,400 63,20011,800 3,800 3,720 5,800 2,100 6,200 14,200 14,200 2,480 1,200 18,600 6,300 31,000 12,400 3,600 6,160 1,200 Total expenses 291,500 99,000 141,20051,300 Net operating income (loss) $ 18,500 $(5,000) $ 12,800 $ 10,700 The following additional information is available about the company a. Only printing costs and sales commissions are variable; all other costs are fixed. The printing costs (which include materials, labor, and variable overhead) are traceable to the three product lines as showrn in the statement above. Sales commissions are 10% of sales for any product. b. The same equipment is used to produce all three books, so the equipment depreciation cost has been allocated equally among the three product lines. An analysis of the company's activities indicates that the equipment is used 25% of the time to produce cookbooks, 45% of the time to produce travel guides, and 30% of the time to produce handy spellers c. The warehouse is used to store finished units of product, so the rental cost has been allocated to the product lines on the basis of sales dollars. The warehouse rental cost is $3 per square foot per year. The warehouse contains 49,600 square feet of space, of which 7,600 square feet is used by the cookbook line, 24,400 square feet by the travel guide line, and 17,600 square feet by the handy speller line

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