aj Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor.If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company'stotal fixed costs would be reduced by 15 percent.Segmented income statements appear as follows:ProductSalesOriginal$32,600Variable costs22,820Contribution margin$ 9,780Strawberry$42,40038,160$ 4,240Orange$51,100Fixed costs allocated to each product lineOperating profit (loss).4,800$ 4,9805,900$(1,660)40,880$10,2207,800$ 2,420Required:a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" ifthere is no effect.)RevenueLess: Variable costsContribution marginLess: Fixed costsOperating profit (loss)Status QuoAlternative:DropStrawberryDifference

For the status quo, to get the total revenue, add the revenue from the three products. The same with…

Answered: Cotrone Beverages makes energy drinks…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 24P

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Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In Addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Product Original Strawberry Orange Sales $32,600 $43,600 $51,600 Variable costs 22,820 39,240 41,280 Contribution margin $ 9,700 $ 4,360…
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Product Original Strawberry Orange Sales $ 33,300 $ 42,300 $ 51,500 Variable costs 23,310 38,070 41,200 Contribution margin $ 9,990 $ 4,230 $ 10,300 Fixed costs allocated to each product line 5,200 6,300 7,500 Operating profit (loss) $ 4,790 $ (2,070 ) $ 2,800 Required: a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no…
S Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Complete this question by entering your answers in the tabs below. Required A Required B Revenue Less: Variable costs Contribution margin Green Beans $ 90,000 60,600 $ 29,400 13,180 $ 16,220 Prepare a differential cost schedule. (Select…
Flare Enterprises sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $60 per unit. Flare management desires a 15% profit margin on sales. Their current full cost for the product is $52 per unit. In order to meet the new target cost, how much will the company have to cut costs per unit, if any?
nework Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: 0 rences Mc Graw Hill rtly cloudy Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Complete this question by entering your answers in the tabs below. Required A Required B Revenue Less: Variable costs Contribution margin Less: Fixed costs Green Beans $ 82,500 57,600 $ 24,900 10, 180 $…
Randy's tireland makes a product that sells for $71 per unit and has $53 per unit in variable costs. Annual fixed costs are $24,000. If Rambles sells 10 units less that breakeven, how much loss would the company recognize on its income statement? (As the question asks "how much loss" you don't have to put the negative sign. For example, suppose the loss is 100, then write the answer as 100 rather than -100.)
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Randy's tireland makes a product that sells for $71 per unit and has $43 per unit in variable costs. Annual fixed costs are $24,000. If Rambles sells 10 units less that breakeven, how much loss would the company recognize on its income statement? (As the question asks "how much loss" you don't have to put the negative sign. For example, suppose the loss is 100, then write the answer as 100 rather than -100.) Round to two decimal places.
O’Neil Enterprises produces a line of canned soups for sale at supermarkets across the country. Demand has been “soft” recently and the company is operating at 70 percent of capacity. The company is considering dropping one of the soups, beef barley, in hopes of improving profitability. If beef barley is dropped, the revenue associated with it will be lost and the related variable costs saved. The CFO estimates that the fixed costs will also be reduced by 25 percent. The following product line statements are available. Product Broth Beef Barley Minestrone Sales $ 32,600 $ 42,800 $ 51,200 Variable costs 22,000 38,600 40,100 Contribution margin $ 10,600 $ 4,200 $ 11,100 Fixed costs allocated to each product line 4,700 6,000 7,100 Operating profit (loss) $ 5,900 $ (1,800 ) $ 4,000 Required: a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil…
Ram Co. is trying to decide whether or not to discontinue one of its products, slow cookers. Last year's sales and expenses for slow cookers are as follows: Sales $65,000 Less expenses: Variable costs $35,000 Fixed costs 48,000 83,000 Net operating loss $(18,000) If slow cookers are discontinued, 75% of the fixed costs can be avoided. At the same time, discontinuing slow cookers will have no effect on other products. What is the financial advantage or disadvantage of discontinuing slow cookers? Multiple Choice a)$17,000 financial advantage b)$13,000 financial disadvantage c)$4,000 financial disadvantage d)$6,000 financial advantage
Thomas Company buys and sells a product that has a variable cost per unit of $14. Thomas' fixed costs amount to $66,000. The product sells for $18 each. Thomas currently expects to make and sell 23,000 units. Management believes that if the price per unit is lowered by one dollar, the Company could sell an additional 3,000 units of product. If Thomas implements the lower price strategy, profitability will Multiple Choice O increase by $5,600. decrease by $3,000. decrease by $14,000. increase by $17,000.
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity.

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