A manufacturer is considering eliminating a segment because it shows the following $6,300 loss. All $21,100 of its variable costs are avoidable, and $38,500 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Required A $ 63,300 21,100 42,200 48,500 (6,300) Compute the Required B

A manufacturer is considering eliminating a segment because it shows the following $6,300 loss. All $21,100 of its variable costs are avoidable, and $38,500 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Required A $ 63,300 21,100 42,200 48,500 (6,300) Compute the Required B

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 9PA: Hong Publishing has purchased Lang Publishing. After reviewing titles from both companies, a...

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A manufacturer is considering eliminating a segment because it shows the following $6,400 loss. All $21,300 of its variable costs are avoidable, and $39,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 63,900 21,300 (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? 42,600 49,000 (6,400) Complete this question by entering your answers in the tabs below. Segment Elimination Analysis Sales Variable costs Contribution margin Required A Required B Compute the income increase or decrease from eliminating this segment. Fixed costs Income (loss) Continue S $ 63,900 21,300 42,600 49,000 (6,400) Eliminate
Using your answer to Requirement 1, assume that Reshier Company is considering dropping any model with a negative product margin. What are the alternatives? Which alternative is more cost effective and by how much? (Assume that any traceable fixed costs can be avoided.) Do NOT round interim calculations and, if required, round your answer to the nearest dollar. will add $fill in the blank 8723bbfe4004028_3 to operating income 3. What if Reshier Company can only avoid 182 hours of engineering time and 4,800 hours of setup time that are attributable to Model 1? How does that affect the alternatives presented in Requirement 2? Which alternative is more cost effective and by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar. will add $fill in the blank 8723bbfe4004028_5 to operating income
Central Industries has three product lines: A, B, and C. The information given below is available. Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C ?and does not replace it. What will happen to operating income Sales Variable costs Contribution margin. Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76.000 24,000 9,000 6.000 $9.000 Product B S90,000 48,000 42,000 18,000 9.000 $15.000 Product C $44,000 35,000 9,000 3,000 7.700 S(1.700) increase by $600 increase by S1,700 () decrease by S6,000 decrease by S9,000 ) increase by S2,400 ()
Central Industries has three product lines: A, B, and C. The information given below is available. Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C Pand does not replace it. What will happen to operating income Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76,000 24,000 9,000 6.000 $9.000 Product B $90,000 48.000 42,000 18,000 9,000 $15.000 Product C $44,000 35,000 9,000 3,000 7.700 $(1.700) increase by $600 increase by $1,700 decrease by S6,000 decrease by S9,000 () increase by $2,400 ()
Which of the following statements is false? (You may select more than one answer.)a. The same cost can be traceable or common depending on how the segment isdefined.b. In general, common fixed costs should be assigned to segments.c. If a company eliminates a segment of its business, the costs that were traceable tothat segment should disappear.d. If four segments share $1 million in common fixed costs and one segment is eliminated, the common fixed costs will decrease by $250,000.
Match each item with the correct statement below. The point where total sales revenue equals total cost Drag answer here Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the elimination of any one segment Drag answer here Sales revenue minus total variable cost or price minus unit variable cost Drag answer here Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated Drag answer here The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume Drag answer here The use of fixed costs to extract higher percentage changes in profits as sales activity changes Drag answer here A measure of the sensitivity of profit changes to changes in sales volume Drag answer here The relative combination of products (or services) being sold by an organization Drag…
(a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.) Customer margin under activity-based costing [ ] I got $(7,840) but it was incorrect. :( (b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.) Product margin under the traditional costing system $(10,800) I got $(10,800) and it was correct. :) (c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer.) check all that apply When the percentage of selling and administrative…
Hong Publishing has purchased Lang Publishing. After reviewing titles from both companies, a decision must be made to determine what titles must be dropped. The following information is available to make the decision. A. What Is the total income if all titles were produced? B. If Title X was dropped, what would be the effect on Net Income? C. How much did Title X Contribute to Fixed Costs? D. Determine the cost and the amount that will remain even it Title X is dropped? E. Which costs and amount will be eliminated if Title X is dropped?
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How much would be the net effect on the total segment profit if product B is dropped and discontinued? Assume that by dropping product B, product A would increase A's sales by 80%. How much would be the net effect on the total segment profit? Assume that by dropping product B, product A would decrease A's sales by 20%. Moreover, 30,000 of common costs allocated are avoidable. How much would be the net effect on the total segment profit?
Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.) Required: a. Assume that only one product is being sold in each of the following four case situations: Unit sold Sales Variable expenses Fixed expenses Operating income (loss) Contribution margin per unit Sales Variable expenses Fixed expenses $ Operating income (loss) Average contribution margin (percentage) Case #1 20,100 241,200 $ 160,800 67,000 $ Case #2 S $ $ Case #1 134,000 42,880 10,720 S 10 S 8,700 20% b. Assume that more than one product is being sold in each of the following four case situations. (Enter "Contribution margin ratio" in percent. Round your final answers to the nearest whole dollar amount.) 534,000 $ Case #3 Case #2 13,400 434,000 282,100 108,500 93,800 Case #4 8,040 S 402,000…