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Problem 1 Sierra Company sells two items, product Standard and product Premium. The...

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Accounting

Problem 1
Sierra Company sells two items, product Standard and product Premium. The company is considering dropping product Premium. It is expected that sales of product Standard will increase by 50% a s a result. Dropping product Premium will allow the company to cancel its monthly equipment rental costing $250 per month. The other existing equipment will be used for additional production of product Standard. One employee earning 300 per month can be terminated if Premium production is dropped. Sierra's other fixed costs are allocated and will continue regardless of the decision made. A condensed, budgeted monthly income statement with both products follows:
\table[[,Standard,Premium,Total],[Sales,$12,000,$10,000,$22,000
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