Exercise 23-8 Segment elimination P4 Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $300,000 of its fixed costs are avoidable. (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $980,000 700,000 280,000 340,000 $ (60,000) Page 923

Exercise 23-8 Segment elimination P4 Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $300,000 of its fixed costs are avoidable. (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $980,000 700,000 280,000 340,000 $ (60,000) Page 923

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter18: Activity-Based Costing

Section: Chapter Questions

Problem 18.17EX: Evaluating selling and administrative cost allocations Gordon Gecco Furniture Company has two major...

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Ch. 7 Incremental Analysis pg 467 Segment Income Statement Please provide the answer and explain the answer to the following question with the information given below. "Big Tent Company is trying to decide whether to keep or drop one of its outdoor wedding tents. The company's segmented income statement shows that this product is generating a net loss as follows:" Sales Revenue: $100,000 Less: Variable Costs $70,000 Contribution Margin $30,000 Less: Direct Fixed Costs $10,000 Segment Margin $20,000 Less: Allocated common fixed costs $30,000 Net Operating Income $(10,000) The company estimates that eliminating this product line will increase the contribution margin on a related product line by $25,000. Based on this information, what impact would dropping the line have on the company's overall profitability?
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Please do not give solution in image format thanku
Please do not give solution in image format thanku
Required information Problem 18-4A (Static) Break-even analysis, different cost structures, and income calculations LO C2, A1, P2 [The following information applies to the questions displayed below.] Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 50,000 units of each product. Income statements for each product follow. Sales Variable costs. Contribution margin Fixed costs Income Problem 18-4A (Static) Part 3 Sales Variable cost Contribution margin Carvings $ 2,000,000 1,600,000 400,000 125,000 $ 275,000 3. Assume that the company expects sales of each product to increase to 60,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). Fixed costs Income (loss) Units Mementos $ 2,000,000…
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Multiple choice-Problems
Evaluating selling and administrative cost allocations Gordon Gecco Furniture Company has two major product lines with the following characteristics: Commercial office furniture: Few large orders, little advertising support, shipments in full truckloads, and low handling complexity Home office furniture: Many small orders, large advertising support, shipments in partial truckloads, and high handling complexity The company produced the following profitability report for management: The selling and administrative expenses are allocated to the products on the basis of relative sales dollars. Evaluate the accuracy of this report and recommend an alternative approach.