Hackerott Camera is considering eliminating Model AE1 from its camera line because of losses over the past quarter. The past three months of information for model AE1 is summarized below:

Sales (1,000 units)
$250,000

Manufacturing costs:

Direct materials
140,000

Direct labor ($15 per hour)
30,000

Support
100,000

Operating loss
($20,000)

Support costs are 70% variable and the remaining 30% is depreciation of special equipment for model AE1 that has no resale value.
Should Hackerott Camera eliminate Model AE1 from its product line? Why or why not?
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