The following information is for X Company's two products - A and B: Sales Total contribution margin Fixed costs: Avoidable Unavoidable Profit Product A $93,000 39,990 21,000 5,000 $13,990 Product B $92,000 36,800 26,500 30,000 $-19,700 The company is considering dropping Product B because of the $19,700 loss. If X Company drops Product B, it will use the freed-up resources to increase sales of Product A by $16,000. If X Company drops Product B and increases sales of A, firm profits will change by

The following information is for X Company's two products - A and B: Sales Total contribution margin Fixed costs: Avoidable Unavoidable Profit Product A $93,000 39,990 21,000 5,000 $13,990 Product B $92,000 36,800 26,500 30,000 $-19,700 The company is considering dropping Product B because of the $19,700 loss. If X Company drops Product B, it will use the freed-up resources to increase sales of Product A by $16,000. If X Company drops Product B and increases sales of A, firm profits will change by

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

A.4
The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $179,000 of the fixed manufacturing expenses and $155,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would $ 745,000 $ 387,000 $ 253,400 $216,200 decline increase by if product B90D were dropped. Therefore, the product dropped
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
XYZ company is studying the profitability of a change in operation and has gathered the following information. Anticipated Operation: Fixed Costs: $38,000, Selling Price: $16, Variable Cost $10, and Sales (Units): 9,000. Current Operation: Fixed Costs: $48,000, Selling Price: $22, Variable Cost: $12, and Sales (Units): 6.000. Should XYZ company make the change? Select one Oa.No. because sales will drop by 3.000 units. Ob.Yes, the company will be better off by 54,000. 2E No. because the company will be worse off by $22,000. Od itis impossible to judge because additional information is needed. Oe.No. because the company will be worse off by 54.000.
Manor Company plans to discontinue a department that has a contribution margin of$24,000and 548,000 in foed costs. of the fixed costs,$21,000cannot be avoided. The effect of this discontinuance on Manor's overall net operating income would be an: a increase of$24,000 b increase of$3,000 c. decrease of$3,000 d. decrease of$24,000
None
Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $46,500 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) If the backpack division is dropped, all $484,000 of its variable costs are avoidable, and $216,200 of its fixed costs are avoidable. The impact on Granfield's income from eliminating this business segment would be: Multiple Choice $494,000 decrease $216,200 increase $277,800 decrease $ 978,000 484,000 494,000 540,500 $ (46,500) $494,000 increase
Carolina Enterprise operates three product segments: sinks, bathtubs, and toilet bowls. Below are the figures showing how each product segment performed in 2022. If Carolina drops any segment, it can avoid 40% of the fixed costs allocated to the dropped segment. In 2023, should the sink segment be dropped in order to improve Carolina's financial performance? Sales Variable costs Contribution margin Fixed costs Net operating income Sinks P450,000 (220,000) 230,000 (250,000) P(20,000) Bathtubs P520,000 (315,000) 205,000 (180,000) P25,000 Toilet Bowls P480,000 (280,000) 200,000 (140,000) P60,000 No, because dropping the sink segment will cause Carolina's total net operating income to decrease by P150,000. Yes, because dropping the sink segment will cause Carolina's total net operating income to increase by P150,000. Yes, because dropping the sink segment will cause Carolina's total net operating income to increase by P130,000. No, because dropping the sink segment will cause Carolina's…
Hh2. Account
be discontinued. The special equipment used to produce the trampolines has A common fixed cost that is allocated on the basis of sales pesos. supervisors assigned to the model would be discharged.. Management is concerned about the continued losses shown by the round trampolines and wants a recommendation as to whether or not the line should no resale value. If the round trampoline model is dropped, the two line Problem 2, page 313-Crystal Sports Equipment (Eliminate or Retain Product Line) Requirement: Compute the increase/decrease in net operating income if the production and sale of the round trampolines is continued. Problem 2 (Eliminate or Retain a Product Line) Crystal Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales and expenses for the past month follow: Round P140,000 60,000 80,000 Trampoline Rectangular Octagonal P500,000 200,000 300,000 Total Sales Less variable expenses. Contribution margin.. Less fixed expenses: P360,000 P1,000,000…
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 (loss) $ 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?
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. Title Y Title Z Title X $99,000 Sales $151,000 $199,000 Variable Cost 51,000 76,000 100,000 Contribution Margin $48,000 $75,000 $99,000 Direct Fixed Cost 19,000 40,000 Allocated Common Fixed Cost 10,000 21,000 Net Income $19,000 $38,000 A. What is the total income if all titles were produced? 29,000 15,000 $31,000 B. If Title X was dropped, what would be the effect on Net Income? ✔ Loss C. How much did Title X Contribute to Fixed Costs? D. Determine the cost and the amount that will remain even if Title X is dropped. Allocated Fixed Cost ✓ S E. Which costs and amount will be eliminated If Title X is dropped? Contribution Margin ✓ Direct Fixed Cost $