Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company's direct fixed costs can be avoided if a segment is dropped. The information is available for the segments. Custom Logo Embroidery Apparel Sales $60,000 $250,000 Variable costs 29,000 111,000 Contribution margin $31,000 $139,000 Direct fixed costs 22,000 41,000 Allocated common fixed costs 12,000 50,000 Net income $(3,000) $48,000 A. What will be the impact on net income if the embroidery segment is dropped? Net income $ B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? Contribution margin 2$ Net income C. Identify one cost that is not relevant in this analysis.

Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company's direct fixed costs can be avoided if a segment is dropped. The information is available for the segments. Custom Logo Embroidery Apparel Sales $60,000 $250,000 Variable costs 29,000 111,000 Contribution margin $31,000 $139,000 Direct fixed costs 22,000 41,000 Allocated common fixed costs 12,000 50,000 Net income $(3,000) $48,000 A. What will be the impact on net income if the embroidery segment is dropped? Net income $ B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? Contribution margin 2$ Net income C. Identify one cost that is not relevant in this analysis.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 8PA: Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to...

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Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company’s direct fixed costs can be avoided if a segment is dropped. The information is available for the segments. Custom Embroidery Logo Apparel Sales $59,000 $251,000 Variable costs 29,000 111,000 Contribution margin $30,000 $140,000 Direct fixed costs 22,000 41,000 Allocated common fixed costs 12,000 50,000 Net income $(4,000) $49,000 A. What will be the impact on net income if the embroidery segment is dropped? Net income $fill in the blank 1 Decrease B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? Contribution margin $fill in the blank 3 Increase Net income $fill in the blank 5 Increase C. Identify one cost that is not…
Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company's direct fixed costs can be avoided if a segment is dropped. The information is available for the segments. Custom Logo Embroidery Apparel Sales $59,000 $250,000 Variable costs 30,000 109,000 Contribution margin $29,000 $141,000 Direct fixed costs 22,000 39,000 Allocated common fixed costs 12,000 50,000 Net income $(5,000) $52,000 A. What will be the impact on net income if the embroidery segment is dropped? Net income $ Decrease B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? Contribution margin $ Increase Net income Increase C. Identify one cost that is not relevant in this analysis. Common fixed costs
Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the companys direct fixed costs can be avoided if a segment is dropped. This information is available for the segments. A. What will be the impact on net income if the embroidery segment is dropped? B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? C. Identify one cost that is not relevant in this analysis.
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Please do not give solution in image format thanku
Vaughn, Inc. currently manufactures a wicket as its main product. Costs per unit are as follows: Direct materials and direct labor $11 Variable overhead Fixed overhead Total 5 8 $24 Saran Company has contacted Vaughn with an offer to sell it 6400 wickets for $18 each. Of Vaughn's $8 per unit fixed cost. $5 per unit is unavoidable. Should Vaughn make or buy the wickets and why? O Make because the cost savings is $12800 ◇ Buy because the cost savings is $6400 ○ Buy because the cost savings is $19200 ○ Make because the cost savings is $6400
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Sheridan, Inc. currently manufactures a wicket as its main product. Costs per unit are as follows: Direct materials and direct labor $11 Variable overhead Fixed overhead Total 7 9 $27 Saran Company has contacted Sheridan with an offer to sell it 5400 wickets for $21 each. Of Sheridan's $9 per unit fixed cost, $5 per unit is unavoidable. Should Sheridan make or buy the wickets and why? O Make because the cost savings is $16200 O Make because the cost savings is $5400 O Buy because the cost savings is $10800 O Buy because the cost savings is $5400
Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply’s business segments. Reception Supplies Bridal Dresses Floral Decorations Sales $160,000 $110,000 $210,000 Variable costs 84,000 50,000 120,000 Contribution margin 76,000 60,000 90,000 Direct fixed costs 50,000 20,000 25,000 Allocated common fixed costs 30,000 25,000 30,000 Net Income ($ 4,000) $ 15,000 $ 35,000 If reception supplies are dropped, floral decoration sales are expected to increase by 5%. What impact will the increase…
Marigold, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $11 Variable overhead Fixed overhead Total $24 Saran Company has contacted Marigold with an offer to sell it 5500 of the wickets for $18 each. If Marigold makes the wickets, variable costs $5 per unit is unavoidable. Should Marigold make or buy the wickets? Make; savings - $11000 Buy; savings - $16s00 Make; savings = $5500 Buy; savings = $5500