Should Product C be discontinued? Calculate profit under two scenarios: current production vs. discontinuing C and doubling A & B.

To determine whether to agree with the suggestion to discontinue Product C, we need to compare the total profit generated by the company under two scenarios:

1. Producing all three products (A, B, and C) at current output levels.
2. Discontinuing Product C and doubling the production of Products A and B.

We will use the contribution margin approach, which focuses on variable costs and fixed costs.

Step 1: Calculate Variable Cost per unit for each product.
Variable Cost per unit = Material + Labor + Variable Overhead

• Product A: $$\text{Variable Cost A} = \text{₦}10 + \text{₦}7 + \text{₦}8 = \text{₦}25$$