Carolina Enterprise operates three product segments: sinks, bathtubs, and toiletbowls. Below are the figures showing how each product segment performed in2022.If Carolina drops any segment, it can avoid 40% of the fixed costs allocated to thedropped segment. In 2023, should the sink segment be dropped in order toimprove Carolina's financial performance?SalesVariable costsContribution marginFixed costsNet operating incomeSinksP450,000(220,000)230,000(250,000)P(20,000)BathtubsP520,000(315,000)205,000(180,000)P25,000Toilet BowlsP480,000(280,000)200,000(140,000)P60,000No, because dropping the sink segment will cause Carolina's total net operatingincome to decrease by P150,000.Yes, because dropping the sink segment will cause Carolina's total net operatingincome to increase by P150,000.Yes, because dropping the sink segment will cause Carolina's total net operatingincome to increase by P130,000.No, because dropping the sink segment will cause Carolina's total net operatingincome to decrease by P130,000.

The differential analysis is performed to analyse the the effects of discontinued product on the…

Answered: Carolina Enterprise operates three…

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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