Applewood Electronics, a division of Elgin
Corporation, manufactures two large-screen television models: the Monarch, which has been produced
since 2006 and sells for $900, and the Regal, a newer model introduced in early 2009 that sells for $1,140.
Based on the following income statement for the year ended November 30, 2010, senior management at
Elgin have decided to concentrate Applewood’s marketing resources on the Regal model and to begin to
phase out the Monarch model because Regal generates a much bigger operating income per unit.