The following operating income data about the performance of the two product lines: Sales revenue. Cost of goods sold: Variable.. Fixed.. Total cost of goods sold.. Gross profit... Marketing and administrative expenses: Variable.. Fixed.. Total marketing and administrative expenses Operating income (loss)... Product Line Industrial Household Systems Systems Total $330,000 $360,000 $690,000 $ 35,000 250,000 $285,000 $ 45,000 62,000 39,000 $101,000 $(56,000) Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall $44,000 $79,000 67,000 317,000 $111,000 $396,000 $249,000 $294,000 76,000 138,000 23,000 62,000 $99,000 $200,000 $150,000 $ 94,000 The product line is losing money so with a commission study it will determine whether the company should discontinue the product line. Company accountants estimate that discontinuing, will decrease fixed cost of goods sold by $81,000 and decrease fixed marketing and administrative expenses by $14,000. Production engineers believe that by cutting down on project expenses the company could save another $100,000 of fixed cost of goods sold from the product line (GREEN). 1. Using an incremental analysis approach (only relevant information) clearly calculate whether HVFP should discontinue the product line. Your analysis should first show the results without the GREEN savings and then show the results with the GREEN savings. 2. Prepare contribution margin income statements to show HVFP's total operating income under the three alternatives (a) with the industrial systems product line, (b) without the industrial systems product line, and (c) without the industrial systems product line and including the GREEN savings.

Po.3.

Sales Cost of goods sold Gross profit Expenses: $186,000,000 (102,000,000) $84,000,000 Selling expenses $16,000,000 Administrative expenses 5,200,000 Total expenses (21,200,000) Operating income $62,800,000 The division of costs between variable and fixed is as follows: Cost of goods sold Selling expenses Administrative expenses Variable Fixed 70% 30% 75% 25% 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,160,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs Total fixed costs 86,000,000 ✓ 37,700,000 X 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost Unit contribution margin 86 V ✓ 100 3. Compute the break-even sales (units) for the…

REQUIRED: How much is the company's overall income?