AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, CD players, and speakers. System A, of slightly higher quality than system B, costs $20 more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow: System A $ 45,000 20,000 25,000 System B Sales Less: Variable expenses Contribution margin Less: Fixed costs Operating income 10,000 $15,000 25,500 7,000 3,200 $ 32,500 18,000 4,800 2,700 52,100 5(11,000) Tendset 000 "This includes common fixed costs totalling $18,000, allocated to each product in proportion to its revenues. 674 The owner of the store is concerned about the profit performance of system B and is considering dropping it. If the product is dropped, sales of system A will increase by 30 percent, and sales of headsets will drop by 25 percent
AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, CD players, and speakers. System A, of slightly higher quality than system B, costs $20 more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow: System A $ 45,000 20,000 25,000 System B Sales Less: Variable expenses Contribution margin Less: Fixed costs Operating income 10,000 $15,000 25,500 7,000 3,200 $ 32,500 18,000 4,800 2,700 52,100 5(11,000) Tendset 000 "This includes common fixed costs totalling $18,000, allocated to each product in proportion to its revenues. 674 The owner of the store is concerned about the profit performance of system B and is considering dropping it. If the product is dropped, sales of system A will increase by 30 percent, and sales of headsets will drop by 25 percent
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems
that have radios, CD players, and speakers. System A, of slightly higher quality than system B, costs $20
more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be
used with either system. Variable-costing income statements for the three products follow: System A $
45,000 20,000 25,000 System B Sales Less: Variable expenses Contribution margin Less: Fixed costs
Operating income 10,000 $15,000 25,500 7,000 3,200 $ 32,500 18,000 4,800 2,700 52,100 5(11,000) Tendset
000 "This includes common fixed costs totalling $18,000, allocated to each product in proportion to its
revenues. 674 The owner of the store is concerned about the profit performance of system B and is
considering dropping it. If the product is dropped, sales of system A will increase by 30 percent, and
sales of headsets will drop by 25 percent
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