Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement follows: Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation Advertising Segment margin Torch $350,000,000 300,000,000 $ 50,000,000 12,000,000 21,000,000 $ 17,000,000 ΕΙΚ $50,000,000 10,000,000 $ 40,000,000 7,000,000 10,000,000 $ 23,000,000 2. Conceptual Connection: Should Charlevoix keep or drop Walloon? Walloon $80,000,000 60,000,000 $ 20,000,000 5,000,000 30,000,000 $ (15,000,000) Total $480,000,000 370,000,000 $ 110,000,000 24,000,000 61,000,000 $ 25,000,000 Direct fixed expenses consist of depreciation and advertising. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different marketing campaign whose advertising would remain if the associated product were dropped. Required: 1. Conceptual Connection: Estimate the impact on profit that would result from dropping Walloon. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".

Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement follows: Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation Advertising Segment margin Torch $350,000,000 300,000,000 $ 50,000,000 12,000,000 21,000,000 $ 17,000,000 ΕΙΚ $50,000,000 10,000,000 $ 40,000,000 7,000,000 10,000,000 $ 23,000,000 2. Conceptual Connection: Should Charlevoix keep or drop Walloon? Walloon $80,000,000 60,000,000 $ 20,000,000 5,000,000 30,000,000 $ (15,000,000) Total $480,000,000 370,000,000 $ 110,000,000 24,000,000 61,000,000 $ 25,000,000 Direct fixed expenses consist of depreciation and advertising. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different marketing campaign whose advertising would remain if the associated product were dropped. Required: 1. Conceptual Connection: Estimate the impact on profit that would result from dropping Walloon. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".

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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