Aqua Life Jackets, Inc. has three product lines as shown below. The company is considering whether or not to eliminate any of its product lines. The results from the past year are shown below. Total Children $5,000,000 3,500,000 1,500,000 1,600,000 (100,000) Adults $12.000,000 7.400,000 4,600,000 2,000,000 2,600,000 Infant $1,500,000 $1,600,000 (100,000) 400,000 (500,000) $18,500,000 12,500,000 6,000,000 4,000,000 2,000,000 Sales Variable Costs Contribution Margin Fixed Costs Opertating Income $205,000 of the fixed costs in each segment are direct to that segment. The rest of the fixed costs are common allocated fixed costs that would remain with the company whether any segment is dropped. Identify which (if any) of the product lines should be eliminated. A. Eliminate V 1. Adult В. Кеер 2. Children v 3. Infant
Aqua Life Jackets, Inc. has three product lines as shown below. The company is considering whether or not to eliminate any of its product lines. The results from the past year are shown below. Total Children $5,000,000 3,500,000 1,500,000 1,600,000 (100,000) Adults $12.000,000 7.400,000 4,600,000 2,000,000 2,600,000 Infant $1,500,000 $1,600,000 (100,000) 400,000 (500,000) $18,500,000 12,500,000 6,000,000 4,000,000 2,000,000 Sales Variable Costs Contribution Margin Fixed Costs Opertating Income $205,000 of the fixed costs in each segment are direct to that segment. The rest of the fixed costs are common allocated fixed costs that would remain with the company whether any segment is dropped. Identify which (if any) of the product lines should be eliminated. A. Eliminate V 1. Adult В. Кеер 2. Children v 3. Infant
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Aqua Life Jackets, Inc. has three product lines as shown below. The company is considering whether or not to eliminate any of its product lines. The results from the past year
are shown below.
Total
$18,500,000
Children
Adults
Infant
$1,500,000
$12,000,000
7,400,000
4,600,000
$5,000.000
Sales
Variable Costs
12,500,000
6,000,000
4,000,000
3,500,000
$1,600,000
(100,000)
1,500,000
Contribution Margin
Fixed Costs
1,600,000
(100,000)
400,000
2,000,000
2,000,000
|(500,000)
2.600,000
Opertating Income
$205,000 of the fixed costs in each segment are direct to that segment. The rest of the fixed costs are common allocated fixed costs that would remain with the company whether
any segment is dropped. Identify which (if any) of the product lines should be eliminated.
Eliminate
-v 1. Adult
B. Keep
2. Children
-V 3. Infant
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