A B C D Sales 160 2000 80 40 Direct material 24 32 16 3 Direct Wages 40 48 32 8 Factory overheads 48 64 40 8 Selling and admin expenses 24 30 12 6 Profit/loss 24 26 (20) 15 40% of factpry oferheads vary at normal volumes and the selling and administation overheads vary at the extent of 5% of sales.20% of sales of product "C"is done in conjunction with product Ä" and as much as the discontinuance of product "C"will bring down the sales of product " A" by 10% Prepare a contribution format income statement and in view of loss reported for product C, the management is considering discounting it. In that evvent the company can save a su of Rs.8 million in fixed expenses.What is the financial implication of discounting product C.
A B C D Sales 160 2000 80 40 Direct material 24 32 16 3 Direct Wages 40 48 32 8 Factory overheads 48 64 40 8 Selling and admin expenses 24 30 12 6 Profit/loss 24 26 (20) 15 40% of factpry oferheads vary at normal volumes and the selling and administation overheads vary at the extent of 5% of sales.20% of sales of product "C"is done in conjunction with product Ä" and as much as the discontinuance of product "C"will bring down the sales of product " A" by 10% Prepare a contribution format income statement and in view of loss reported for product C, the management is considering discounting it. In that evvent the company can save a su of Rs.8 million in fixed expenses.What is the financial implication of discounting product C.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
100%
| A | B | C | D | |
| Sales | 160 | 2000 | 80 | 40 |
| Direct material | 24 | 32 | 16 | 3 |
| Direct Wages | 40 | 48 | 32 | 8 |
| Factory |
48 | 64 | 40 | 8 |
| Selling and admin expenses | 24 | 30 | 12 | 6 |
| 24 | 26 | (20) | 15 | |
40% of factpry oferheads vary at normal volumes and the selling and administation overheads vary at the extent of 5% of sales.20% of sales of product "C"is done in conjunction with product Ä" and as much as the discontinuance of product "C"will bring down the sales of product " A" by 10%
- Prepare a contribution format income statement and in view of loss reported for product C, the management is considering discounting it. In that evvent the company can save a su of Rs.8 million in fixed expenses.What is the financial implication of discounting product C.
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