1. Aladdin's Gyrocery has two product segments: falafel and gyros. Data for each product segment is as follows: Gyros Falafel Units sold 9,500 6,300 Revenue $85,500 $37,800 Variable Costs $38,000 $19,900 Traceable Fixed Costs $19,000 $12,500 Allocated Fixed Costs $7,000 $6,500 Total $21,500 -$1,100 Aladdin's is considering dropping the falafel segment. If it is dropped, 28% of allocated fixed costs are avoidable and 100% of traceable fixed costs are avoidable. In addition, if the segment is dropped, Aladdin's can sell special equipment used to make falafel for $710. If the Falafel segment is dropped, what will the new net operating income be? Round your answer to the nearest dollar. 2. Should Aladdin's Gyrocery drop the Falafel segment? No, Net Operating Income would decrease Yes, Net Operating Income would increase Yes, Net Operating Income would decrease No, Net Operating Income would increase
1. Aladdin's Gyrocery has two product segments: falafel and gyros. Data for each product segment is as follows: Gyros Falafel Units sold 9,500 6,300 Revenue $85,500 $37,800 Variable Costs $38,000 $19,900 Traceable Fixed Costs $19,000 $12,500 Allocated Fixed Costs $7,000 $6,500 Total $21,500 -$1,100 Aladdin's is considering dropping the falafel segment. If it is dropped, 28% of allocated fixed costs are avoidable and 100% of traceable fixed costs are avoidable. In addition, if the segment is dropped, Aladdin's can sell special equipment used to make falafel for $710. If the Falafel segment is dropped, what will the new net operating income be? Round your answer to the nearest dollar. 2. Should Aladdin's Gyrocery drop the Falafel segment? No, Net Operating Income would decrease Yes, Net Operating Income would increase Yes, Net Operating Income would decrease No, Net Operating Income would increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Aladdin's Gyrocery has two product segments: falafel and gyros. Data for each product segment is as follows:
| Gyros | Falafel | |
| Units sold | 9,500 | 6,300 |
| Revenue | $85,500 | $37,800 |
| Variable Costs | $38,000 | $19,900 |
| Traceable Fixed Costs | $19,000 | $12,500 |
| Allocated Fixed Costs | $7,000 | $6,500 |
| Total | $21,500 | -$1,100 |
Aladdin's is considering dropping the falafel segment. If it is dropped, 28% of allocated fixed costs are avoidable and 100% of traceable fixed costs are avoidable. In addition, if the segment is dropped, Aladdin's can sell special equipment used to make falafel for $710.
If the Falafel segment is dropped, what will the new net operating income be?
Round your answer to the nearest dollar.
2.
Should Aladdin's Gyrocery drop the Falafel segment?
No, Net Operating Income would decrease
Yes, Net Operating Income would increase
Yes, Net Operating Income would decrease
No, Net Operating Income would increase
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