Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $330,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin. Fixed costs Income (less) $ 1,097,600 784,000 313,600 376,000 $ (62,400) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated?

Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $330,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin. Fixed costs Income (less) $ 1,097,600 784,000 313,600 376,000 $ (62,400) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bailey Corporation manufactures and sells a number of products, including Product G. Results for last year for the manufacture and sale of Product G are as follows: Sales Less expenses: Variable production costs Sales commissions Salary of product manager Fixed product advertising Fixed manufacturing overhead Net operating loss $450,000 110,000 95,000 80,000 70,000 $750,000 805,000 ($55,000) Bailey is trying to decide whether or not to discontinue the manufacture and sale of Product G. All expenses other than fixed manufacturing overhead are avoidable if the product is dropped. None of the fixed manufacturing overhead is avoidable. Assume that dropping Product G would result in a $40,000 increase in the contribution margin of other product lines. If Bailey chooses to drop Product G, then the change in net operating income next year due to this action will be a: $95,000 increase $95,000 decrease $25,000 decrease $25,000 increase
A.4
10. What would have been the company's variable costing net operating income (loss) if it had produced and sold 43,000 units? You do not need to perform any calculations to answer this question.
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) Required B Compute the incomo
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Change in Contribution Margin Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sales price Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed manufacturing costs Operating income Head Pops Inc. Analysis Line Item Description Unit volume increase x Contribution margin per unit Increase in profitability Sun Sound Ear Bling Headphones Headphones $29.80 $46.50 (16.70) (26.00) $13.10 $20.50 (6.00) $7.10 (2.70) $4.40 Prepare an analysis indicating the increase or decrease in total profitability if 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for…
Choose the product that will have the largest loss if sales greatly decrease. Letter Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 50,000 units of each product. Sales and costs for each product follow.
Product B has revenue of $39,500, variable cost of goods sold of $25,500, variableselling expenses of $16,500, and fixed costs of $15,000, creating a loss from operationsof $17,500. Prepare and show in solution a differential analysis as of May 9 todetermine if Product B should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision.
Marinara Sdn.Bhd. (MSB) makes marine equipment. MSB has been experiencing losses for one of its product line called bilge pump. The most recent quarterly income statement for the bilge pump is as follows: RM RM Sales revenue Less: variable costs Manufacturing costs Sales commissions Shipping Total variable costs Contribution margin 850,000 330,000 42,000 18,000 (390,000) 460,000 Less: Fixed costs 270,000 Advertising Depreciation of Equipment General factory overhead Salary-line supervisors Insurance on inventories Purchasing department expense |Total fixed costs Net operating loss 80,000 105,000 32,000 8,000 45,000 (540,000) (80,000) Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total purchasing department expenses. The equipment used in this production line cannot be used elsewhere and it has no resale value. REQUIRED: (a) State the basic rule in making decision to…