Mohave Corporation is considering eliminating a product from its Sand Trap line of beach umbrellas. This collection is aimed at people who spend time on the beach or have an outdoor patio near the beach. Two products, the Indigo and Verde umbrellas, have impressive sales. However, sales for the Azul model have been dismal. Mohave's information related to the Sand Trap line is shown as follows. Segmented Income Statement for Mohave's Sand Trap Beach Umbrella Products Indigo $ 60,000 34,000 $ 26,000 1,900 $ 24,100 17,840 $ 6,260 Sales revenue Variable costs Contribution margin Less: Direct fixed costs Segment margin Common fixed costs* Net operating income (loss) *Allocated based on total sales revenue Req 1A Mohave determined that eliminating the Azul model would cause sales of the Indigo and Verde models to increase by 10 percent and 15 percent, respectively. Variable costs for these two models would increase proportionately. Although the direct fixed costs could be eliminated, the common fixed costs are unavoidable. The common fixed costs would be redistributed to the remaining two products. Sales Revenue Variable Costs Required: 1-a. Complete the table given below, assuming Mohave Corporation drops the Azul line. 1-b. Will Mohave's net operating income increase or decrease if the Azul model is eliminated? By how much? 2. Should Mohave drop the Azul model? 3-a. Complete the table given below assuming that Mohave had no direct fixed overhead in its production information and the entire $51,000 of fixed cost was common fixed cost. 3-b. Should Mohave drop the Azul model? 3-c. What is the increase or decrease in the net operating income of Mohave? Complete this question by entering your answers in the tabs below. Req 1B Contribution Margin Direct Fixed Costs Req 2 Segment Margin Common Fixed Costs Net Operating Income (Loss) Req 3A Indigo Verde $ 60,000 31,000 $ 29,000 2,500 $ 26,500 17,840 $ 8,660 Req 3B < Req 1A Complete the table given below, assuming Mohave Corporation drops the Azul line. Note: Do not round intermediate calculations. Round Common Fixed Costs to the nearest whole dollar. Verde Req 3C Azul $ 30,000 26,000 $4,000 2,000 $2,000 8,920 $ (6,920) Total $ 150,000 91,000 $ 59,000 6,400 Total $ 52,600 44,600 $ 8,000 Req 1B >

Juice WORLD Company makes and sells gourmet juices and is looking to purchase a new, more efficient fruit peeler system. Which of the following would not be relevant in making the decision? The per-year power cost of the new system The installation cost of the new system The per year power cost of the current system The original price of the current system O The capacity of the current freezer system

Mohave Corp. is considering eliminating a product from its Sand Trap line of beach umbrellas. This collection is aimed at people who spend time on the beach or have an outdoor patio near the beach. Two products, the Indigo and Verde umbrellas, have impressive sales. However, sales for the Azul model have been dismal.       Mohave’s information related to the Sand Trap line is shown below.         Segmented Income Statement for Mohave’s Sand Trap Beach Umbrella Products   Indigo   Verde   Azul     Total Sales revenue $ 60,000   $ 60,000   $ 30,000     $ 150,000 Variable costs   34,000     31,000     26,000       91,000 Contribution margin $ 26,000   $ 29,000   $ 4,000     $ 59,000 Less: Direct fixed costs   1,900     2,500     2,000       6,400 Segment margin $ 24,100   $ 26,500   $ 2,000     $ 52,600 Common fixed costs*   17,840     17,840     8,920       44,600 Net operating income (loss) $ 6,260   $ 8,660   $ (6,920 )   $ 8,000   *Allocated based on total…

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Golden Tours, Inc., operates tours throughout the United States. A study has indicated that some of the tours are not profitable, and consideration is being given to dropping these tours to improve the company’s overall operating performance.      One such tour is a two-day Historic Mansions bus tour conducted in the southern states. An income statement from a typical Historic Mansions tour is given below:             Ticket revenue (110 seat capacity × 45%   occupancy × $60 ticket price per person) $ 2,970    100 %   Variable expenses ($18 per person)   891    30 %             Contribution margin $ 2,079    70 %             Tour expenses:              Tour promotion $ 650             Salary of bus driver   330             Fee, tour guide   690             Fuel for bus   130             Depreciation of bus   330             Liability insurance, bus   180             Overnight parking fee, bus   50             Room and meals,…

Annie B's Homemade Ice Cream is an ice cream shop in Asheville, NC. Annie's Homemade currently owns one push cart along with a branded tent to facilitate off-site sales. The company is considering buying a second push cart and tent for $4,500 to expand its off- site sales opportunities. Because the company's cargo trailer has the capacity to transport two push carts, there is no need to buy an additional trailer at this time. Annie's provided the following estimates to assist with analyzing the investment in an additional push cart: Additional sales events per month (in June, July, August, and September) Average number of servings sold per event Selling price per serving Ingredients and packaging cost per serving Average time for manager to make one batch of 100 servings of ice cream Average time for employees to pre-package one serving of ice cream Pickup truck diesel fuel, oil, and diesel exhaust fluid expenses Average duration of each event (including drive time) Average number of…

The cost of introducing the products in selected geographic areas for gauging consumer response is $150K. If the company decides to introduce the product this way, it would need to see the responses to the products before they decide to launch the product line nationally. The probability of a favorable response in the selected geographical areas is estimated at O.60. La Comida can also decide not to go for the launching in the product in selected geographical areas and go ahead with the nationwide launch or not. If La Comida Foods decides to go full-blast in launching the products nationally and are a success, the company estimates that they will gain an annual income of $1.6 million. If the products are not a hit, the company will realize losses to the tune of $700K. La Comida estimates the probability of success for the sauces and marinades to be 0.50, if these are introduced without gauging consumer response.

Hawk Airways is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how to price its round-trip tickets. The market research group at Hawk Airways segments the market into business and pleasure travelers. It provides the following information on the effects of two different prices on the number of seats expected to be sold and the variable cost per ticket, including the commission paid to travel agents: (Click the icon to view the pricing and ticket information.) Pleasure travelers start their travel during one week, spend at least one weekend at their destination, and return the following week or thereafter. Business travelers usually start and complete their travel within the same work week. They do not stay over weekends. Assume that round-trip fuel costs are fixed costs of $24,000 and that fixed costs allocated to the round-trip flight for airplane-lease costs, ground services, and flight-crew salaries total $188,000. Read the requirements.…

Denger

Please refer to the attached scenario Identify any unavoidable costs associated with the operation of Fishing Unlimited.