CONTINUE OR DISCONTINUE AN OPERATING SEGMENT Beth Neri Enterprises sells three products, Skinny, Bony and Thinny. Beth, the proprietor, is concernedabout the losses incurred by Thinny, and is considering to discontinue its production and sales.Sales and costs data about Beth Neri's three products are as follows:Skinny Bony Thinny TotalSales price per unitP 5P 7P 9P 21Variable cost per unit23712Contribution margin per unitP 3P 9Fixed cost per unit1236Profit (Loss) per unitР2P 2(P 1)P 3Fixed costs are allocated among the three products based on the floor area they occupy.Beth is thinking that if she would eliminate Thinny, its loss of P1 per unit would likewise be eliminatedthereby increasing her total profit per unit from P3 [P2 + P2 – P1] to P4 [P2 + P2].Is Beth's analysis correct?4.

The income statement determines the net income of the business by subtracting the total expenses…

Beth Neri Enterprises sells three products, Skinny, Bony and Thinny. Beth, the proprietor, is concerned about the losses incurred by Thinny, and is considering to discontinue its production and sales. Sales and costs data about Beth Neri's three products are as follows: Skinny Bony Thinny Total Sales price per unit P5 P7 P9 P 21 Variable cost per unit 3 7 12 Contribution margin per unit P3 P4 P 2 P 9 Fixed cost per unit 1 Profit (Loss) per unit P2 (P 1) P 3 3. 2. 2. 2.

Beth Neri Enterprises sells three products, Skinny, Bony and Thinny. Beth, the proprietor, is concerned about the losses incurred by Thinny, and is considering to discontinue its production and sales. Sales and costs data about Beth Neri's three products are as follows: Skinny Bony Thinny Total Sales price per unit P5 P7 P9 P 21 Variable cost per unit 3 7 12 Contribution margin per unit P3 P4 P 2 P 9 Fixed cost per unit 1 Profit (Loss) per unit P2 (P 1) P 3 3. 2. 2. 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Why is the goodwill procedure best described as a revaluation procedure? No plagarism
Explain Handling Unequal Service Life Problems in Replacement Analysis?
When should a segment or division be dropped?
True or False 1. A continuous lost is assumed to occur at a specific point in the production 2. Abnormal spoilage is accounted in the computation of EUP
How to calculate operating loss?
Difference between Internal reconstruction and External reconstruction (Merger and acquisition)?
Define the term external failure costs.
1. What is the difference of segment reporting and operating segments? Are they interrelated? Please explain in simple term.
What is Over-Absorption of Fixed Overhead?
Define Quasi reorganization.