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7th: T Company has two product lines that it sells at its store. Performance Evaluation figures are as follows: Sales Variable Costs Contribution Margin Fixed Costs (since there are two products, and each takes up half of the store, management divides the total amount evenly between them) Profit Stove Model #1 $300,000 200,000 $100,000 120,000 Stove Model #2 $750,000 450,000 $300,000 120,000 (NOTE: total profit = $160,000) ($20,000) Should Stove Model #1 be discontinued? Why or why not? (If management discontinues Stove Model #1, what would the total profit generated by the store be?) $180,000

7th: T Company has two product lines that it sells at its store. Performance Evaluation figures are as follows: Sales Variable Costs Contribution Margin Fixed Costs (since there are two products, and each takes up half of the store, management divides the total amount evenly between them) Profit Stove Model #1 $300,000 200,000 $100,000 120,000 Stove Model #2 $750,000 450,000 $300,000 120,000 (NOTE: total profit = $160,000) ($20,000) Should Stove Model #1 be discontinued? Why or why not? (If management discontinues Stove Model #1, what would the total profit generated by the store be?) $180,000

FINANCIAL ACCOUNTING
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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7th: T Company has two product lines that it sells at its store. Performance Evaluation figures are as follows: Sales Variable Costs Contribution Margin Fixed Costs (since there are two products, and each takes up half of the store, management divides the total amount evenly between them) Profit Stove Model #1 $300,000 200,000 $100,000 120,000 Stove Model #2 $750,000 450,000 $300,000 120,000 (NOTE: total profit = $160,000) ($20,000) Should Stove Model #1 be discontinued? Why or why not? (If management discontinues Stove Model #1, what would the total profit generated by the store be?) $180,000
Transcribed Image Text:7th: T Company has two product lines that it sells at its store. Performance Evaluation figures are as follows: Sales Variable Costs Contribution Margin Fixed Costs (since there are two products, and each takes up half of the store, management divides the total amount evenly between them) Profit Stove Model #1 $300,000 200,000 $100,000 120,000 Stove Model #2 $750,000 450,000 $300,000 120,000 (NOTE: total profit = $160,000) ($20,000) Should Stove Model #1 be discontinued? Why or why not? (If management discontinues Stove Model #1, what would the total profit generated by the store be?) $180,000
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