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A net loss of $60,000 was reported for Buzz Lightyear if the Asteroid Manufacturing Company for the past year

Marketing

A net loss of $60,000 was reported for Buzz Lightyear if the Asteroid Manufacturing Company for the past year. This loss was computed as follows:

 

Sales $300,000
Variable costs (120,000)
Fxed costs (240,000)
Net Loss (60,000)

 

Because of the loss, Asteroid is considering discounting Buzz Lightyear. The managerial accountant estimates that 60% of Buzz Lightyear's fixed costs are avoidable and 40% are unavoidable. Should Asteroid discontinue the Buzz Lightyear line? Why or why not?

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