Current Attempt in Progress A company has three product lines, one of which has the following results: Sales Variable expenses Contribution margin Fixed expenses Net loss Save for Later esc ! If this product line is eliminated, 60% of the fixed expenses will 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 1 $221000 O increase by $35000. O increase by $15000. O decrease by $90000. O decrease by $15000. Q 131000 A 90000 125000 $(35000) 2 W → S #3 с E D $ 4 R % 5 G Search or type URL FL Attempts: 0 of 1 used MacBook Pro T 6 G & Y 7 H Submit Answer X 8 U 9

Current Attempt in Progress A company has three product lines, one of which has the following results: Sales Variable expenses Contribution margin Fixed expenses Net loss Save for Later esc ! If this product line is eliminated, 60% of the fixed expenses will 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 1 $221000 O increase by $35000. O increase by $15000. O decrease by $90000. O decrease by $15000. Q 131000 A 90000 125000 $(35000) 2 W → S #3 с E D $ 4 R % 5 G Search or type URL FL Attempts: 0 of 1 used MacBook Pro T 6 G & Y 7 H Submit Answer X 8 U 9

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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Meditation Haven has three product lines. Its only unprofitable line is yoga blocks. The results of the yoga blocks line for 2020 is below:Sales 350000 Variable expenses 230000 Fixed expenses 180000 Net loss (60000) If this product line is eliminated, 70% of the fixed expenses can be eliminated. Using incremental analysis, would you recommend the company drop the yoga block line and why?
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Assume the following information: Amount Per Unit Sales $ 600,000 $ 40 Contribution margin $ 360,000 $ 24 Net operating income $ 240,000 If the selling price per unit increases by 8% and unit sales drop by 6%, then the best of estimate of the new net operating income is: Multiple Choice $263,520. $243,520. $253,520. $233,520.
Jake Company has three product lines, one of which has the following results: Sales P215,000 Variable expenses 125,000 Contribution margin 90,000 Fixed expenses 130,000 Net loss P (40,000) If this product line is eliminated, 60% of the fixed expenses will be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, how much will the company's net income or loss be?
e. 5,000 XYZ company is studying the profitability of a change in operation and has gathered the following information. Current Operation: Fixed Costs: $38,000, Selling Price: $16, Variable Cost: $10, and Sales (Units): 9,000. Anticipated Operation: Fixed Costs: $48,000, Selling Price: $22, Variable Cost: $12, and Sales (Units): 6,000. Should XYZ company make the change? Select one: O a. No, because sales will drop by 3,000 units. Ob. It is impossible to judge because additional information is needed. Oc. No, because the company will be worse off by $4,000. O d. Yes, the company will be better off by $6,000. Oe. No, because the company will be worse off by $22000. Next page
(38) A company is considering closing one of its product lines. Current data on the product line are as follows: ♫ Sales revenue Variable costs Direct avoidable fixed costs $27,000 Indirect allocated fixed costs Net income (loss) on the product line ($4,000) The direct avoidable fixed costs will be eliminated if the product line is closed. The indirect allocated fixed costs will remain the same whether the product line is continued or closed. O It will increase by $2,000. O It will decrease by $2,000. (19,000) (10,000) (2.000) By how much will overall company net income change if this company decides to discontinue this product line? It will increase by $4,000. O It will decrease by $4,000. h