Central Industries has three product lines: A, B, and C. The information givenbelow is available. Central Industries is thinking about dropping Product Cbecause it is reporting a loss. Assume Central Industries drops Product CPand does not replace it. What will happen to operating incomeSalesVariable costsContribution marginAvoidable fixed costsUnavoidable fixed costsOperating income(loss)Product A$100,00076,00024,0009,0006.000$9.000Product B$90,00048.00042,00018,0009,000$15.000Product C$44,00035,0009,0003,0007.700$(1.700)increase by $600increase by $1,700decrease by S6,000decrease by S9,000 ()increase by $2,400 ()

We know that under marginal costing Profit = Sales Revenue - Total Variable cost - Total Fixed…

Central Industries has three product lines: A, B, and C. The information given below is available. Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C ?and does not replace it. What will happen to operating income Product A $100,000 76,000 24,000 9,000 6,000 $9.000 Product B $90,000 48.000 42,000 18,000 9.000 $15.000 Product C $44,000 35,000 9,000 3,000 7,700 $(1.700) Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) increase by $600 O increase by $1,700 ) decrease by $6,000 decrease by $9,000 O increase by $2,400 O

Central Industries has three product lines: A, B, and C. The information given below is available. Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C ?and does not replace it. What will happen to operating income Product A $100,000 76,000 24,000 9,000 6,000 $9.000 Product B $90,000 48.000 42,000 18,000 9.000 $15.000 Product C $44,000 35,000 9,000 3,000 7,700 $(1.700) Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) increase by $600 O increase by $1,700 ) decrease by $6,000 decrease by $9,000 O increase by $2,400 O

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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A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ Company A 480,000 156,000 21 % 18 % Company B $ 740,000 GA GA $ 53,000 $ 69 18 % 54.000 % $ $ $ Company C 520,000 155,000 % 12 % 5,000
Product B has revenue of $39,500, variable cost of goods sold of $25,500, variableselling expenses of $16,500, and fixed costs of $15,000, creating a loss from operationsof $17,500. Prepare and show in solution a differential analysis as of May 9 todetermine if Product B should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision.
The following revenue-based profit functions are for X Company's only two products, A and B, last year: Product A: PA 0.26RA- $32,000 Product B: P0.43R- $63,000 Revenue from sales of A was $220,000, and revenue from sales of of B was $150,000. Assuming there is no change in the product mix, what must total revenue be next year in order for X Company to break even [round the weighted average contribution margin rate to two decimal places? OA: $287,879 OB: $336,818 C: $394,077 OD: $461,070 OE: $539,452 OF: $631,159
Match the descriptions 1 through 5 with labels a through e on the CVP chart. Dollars $25,000 $20,000 $15,000 $10,000 $5,000 $0 1. Break-even point 2. Total sales line 3. Loss area 4. Profit area 5. Total costs line (b) 200 400 600 (c) (d) (a) (e) 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 Units produced and sold
Hh2. Account
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations.) Sales Net operating income. Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ Company A 400,000 Company B $ 690,000 $ Company C 670,000 $ 37,000 $ 154,000 $ 142,000 24 % 17% % 13 % % 10 % $ 44,000 $ 5,000
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A company has three product lines, one of which reflects the following results: Sales Variable expenses Contribution margin Fixed expenses Net loss O decrease by $4000. O increase by $4000 decrease by $82000 $181000 99000 O increase by $48000 82000 130000 If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will $ (48000)
Mission Company has three product lines: D, E, and F. The following information is available: D E F Sales revenue 83,000 42,000 24,000 Variable expenses 40,000 26,000 15,000 43,000 16,000 9,000 Fixed expenses 12,000 15,000 17,000 Operating income 31,000 1,000 $(8,000) Mission company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed expenses are unavoidable. Assuming Mission Company discontinues product line F and does not replace it, what affect will this have an operating income?
Wenthorp Enterprises decreased the selling price for its product from $10.00 to $9.00 a unit when total fixed costs decreased from $200,000 to $150,000 and variable cost per unit of $ 5 remained unchanged. How would these changes affect the break-even point? a. The break-even point in units would be increased b. The break-even point in units would be decreased c. The break-even point in units would remain unchanged d. The effect cannot be determined from the information given.
Pepper’s Automotive (see Brief Exercise 18-19) has further analyzed the exhaust systemdivision into three products: exhaust pipes, intake valves, and intake pipes. The incomestatement is available below.If intake valves were dropped, what would be the change in profits in the short run and thelong run, respectively?[LO 18-4]Exhaust Pipes Intake Valves Intake PipesNet revenues $500,000 $300,000 $200,000Variable costs 50,000 150,000 100,000Contribution margin 450,000 150,000 100,000Controllable fixed costs 50,000 50,000 0Controllable margin 400,000 100,000 100,000Noncontrollable fixed costs 100,000 150,000 50,000Contribution by profit center $300,000 $ (50,000) $ 50,000a. Short run: $100,000 decrease; long run: $50,000 increaseb. Short run: $150,000 increase; long run: $50,000 decreasec. Short run: $100,000 increase; long run: $50,000 decreased. Short run: $50,000 increase; long run: $100,000 decrease