The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appearbelow:SalesVariable expensesFixed manufacturing expensesFixed selling and administrative expenses$803, 200$417,300$273,000$233,000All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation hasrevealed that $193,000 of the fixed manufacturing expenses and $167,300 of the fixed selling and administrative expenses areavoidable if product B90D is discontinued.Required:1. What would be the financial advantage (disadvantage) of dropping B90D?米2. Should B90D be dropped?O YesO No

Contribution margin lost if product B90D is discontinue ($803200-$417300) -$3,85,900…

Answered: The management of Wengel Corporation is…

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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Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Required 1 Required 2 Acoustic $ 102,100 44,975 57,125 For Year Ended December 31 Gross profit Direct expenses 15,015 10,100 20,100 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Prepare a departmental contribution to overhead report. 1,960 7,065 2,995 47,235 $ 9,890 Complete this question by entering your answers in the tabs below. Total direct expenses Departmental contribution to overhead Departmental Contribution to Overhead $ Acoustic…
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Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Acoustic Electric Sales $ 102,900 $ 83,300 Cost of goods sold 44,175 47,350 Gross profit 58,725 35,950 Expenses Advertising 4,995 4,270 Depreciation—Equipment 10,080 8,560 Salaries 19,800 17,200 Supplies used 2,000 1,700 Rent 7,055 6,030 Utilities 2,965 2,620 Total expenses 46,895 40,380 Income (loss) $ 11,830 $ (4,430) Prepare a departmental contribution to the overhead report. Based on contribution to overhead, should the electric guitar department be eliminated?
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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?
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20
16. At the end of the year, a company finds that it has under-applied factory overhead by $1,000. What would be the most common accounting treatment in this case? Increase Assets by $1,000 on the Balance Sheet Increase Profit by $1,000 in the Income Statement Increase Liabilities by $1,000 on the Balance Sheet Decrease Cost of Goods Sold by $1,000 in the Income Statement Increase Cost of Goods Sold by $1,000 in the Income Statement.

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