Carrie Dunn Is the Owner and Operator of Dunn's Best

Essay

Carrie Dunn is the owner and operator of Dunn's Best Jams,which she sells at craft festivals.She makes and sells only three types of jams-pecan pie jam,chocolate pie jam,and lemon tart jam.The joint costs of leasing her professional kitchen for manufacturing,travel to craft shows,insurance,and so on are allocated on an equal basis to the three types of jams sold.Last year's sales figures and allocated joint costs follow.Should Dunn's Best Jams stop selling its pecan pie jam? Why or why not?
$\begin{array}{c}\begin{array}{l}\\\\\text { Sales}\\\text { Less: Cost of goods sold}\\\text { Gross margin}\end{array}\begin{array}{c}\text {Pecan Pie Jam}\\\\\$ 4,000 \\\underline{5,000} \\( \$ 1,000)\end{array}\begin{array}{c}\text {Chocolate Pie}\\\text { Jam } \\\$ 8,000 \\\underline{5,000} \\ \$ 3,000 \end{array}\begin{array}{c}\text {Lemon Tart Jam}\\\\\$ 9,000 \\\underline{5,000}\\\$ 4,000\end{array}\end{array}$