Anton Valve Company Produces a Mechanical Valve Used in Water

Essay

Anton Valve Company produces a mechanical valve used in water systems. Three years ago the company introduced an electronic version of the valve. Sales of the mechanical model have steadily declined, and the company will report a loss on the product this year as follows:
$\begin{array}{lr}\text {sales revenue}&\$200,000\\\text {Less costs:}\\\\\text { Unit-level manufacturing costs } & 157,500 \\\text { Batch-level costs } & 2,500 \\\text { Product-level costs } & 5,000 \\\text { Facility-level costs } & 30,000 \\\text { Allocated corporate costs } & \underline{11,500}\\\text { Total costs } &\underline{ 206,500 }\\\text { Net loss } & \underline{\$(6,500)}\end{array}$ If production of the mechanical valve is discontinued, product-level costs will be eliminated but facility-level and corporate costs would not be affected.
Required:Prepare a quantitative analysis that indicates whether the valve should be discontinued.What qualitative factors should be considered in this decision?