Homework Help is Here – Start Your Trial Now!
Business
Accounting
ales 125,000 75

ales 125,000 75

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
100%
Sales Less variable expense Contribution margin Less fixed expense Direct salaries Direct advertising Utilities* Depreciation-fixture** Rent*** Insurance General administrative Total fixed expense Income/Profit Drugs 125,000 50,000 75,000 29,500 1,000. 500 1,000 10,000 2,000. 15,000 59,000 Requirement 2: To utilize the idle capacity. $16.000 Requirement 1: Not to utilize the idle capacity Should the Houseware line be terminated? Cosmetics 75,000 25,000 50,000 12,500 7,500 500 2,000 6,000 500 9,000 38.000 $12.000 Houseware 50,000 30.000 20,000 8,000 6,500 1,000 2,000 4,000 500 6,000 28,000 Allocated cost based on space occupied. ** Depreciation on fixtures used for display of the various product lines. ***Allocated cost based on sales dollars. Insurance-represents insurance carried on inventories maintained within each of the three product line areas... General administrative-allocated to the product lines on the basis of sales dollars. Total admin costs. will not change if the Houseware line is dropped. ($8.000) Answer requirement (1) again, but this time sales of drugs will increase by $75,000 if Houseware is dropped, assume no change in fixed cost.
Transcribed Image Text:Sales Less variable expense Contribution margin Less fixed expense Direct salaries Direct advertising Utilities* Depreciation-fixture** Rent*** Insurance General administrative Total fixed expense Income/Profit Drugs 125,000 50,000 75,000 29,500 1,000. 500 1,000 10,000 2,000. 15,000 59,000 Requirement 2: To utilize the idle capacity. $16.000 Requirement 1: Not to utilize the idle capacity Should the Houseware line be terminated? Cosmetics 75,000 25,000 50,000 12,500 7,500 500 2,000 6,000 500 9,000 38.000 $12.000 Houseware 50,000 30.000 20,000 8,000 6,500 1,000 2,000 4,000 500 6,000 28,000 Allocated cost based on space occupied. ** Depreciation on fixtures used for display of the various product lines. ***Allocated cost based on sales dollars. Insurance-represents insurance carried on inventories maintained within each of the three product line areas... General administrative-allocated to the product lines on the basis of sales dollars. Total admin costs. will not change if the Houseware line is dropped. ($8.000) Answer requirement (1) again, but this time sales of drugs will increase by $75,000 if Houseware is dropped, assume no change in fixed cost.
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS