Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. Thecompany is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer isconsidering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the relatedvariable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent.Segmented income statements appear as follows:SalesVariable costsContribution marginFixed costs allocated to each product lineOperating profit (loss)Green Beans$ 81,50057,200$ 24,3009,780$ 14,520Required: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 BSweet Peas$ 107,000100,300$ 6,70012,840$ (6,140)Tomatoes$ 128,000104,300$ 23,70015,360$ 8,340Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" ifthere is no effect.)

The differential cost schedule is prepared to compare the different alternatives available with the…

Answered: Gilbert Canned Produce (GCP) packs and…

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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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) Green Beans $ 88,000 59, 800 $ 28, 200 12,380 $ 15,820 Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Sweet Peas $ 126,500 112,400 $ 14,100 19,340 $ (5,240) Tomatoes $ 146,700 117,300 $ 29,400 28, 360 $ 1,040
Nico Parts, Inc., produces electronic products with short life cycles (of less than two years). De-velopment has to be rapid, and the profitability of the products is tied strongly to the ability to find designs that will keep production and logistics costs low. Recently, management has alsodecided that post-purchase costs are important in design decisions. Last month, a proposal for anew product was presented to management. The total market was projected at 200,000 units (forthe two-year period). The proposed selling price was $130 per unit. At this price, market sharewas expected to be 25 percent. The manufacturing and logistics costs were estimated to be $120per unit.Upon reviewing the projected figures, Brian Metcalf, president of Nico, called in his chiefdesign engineer, Mark Williams, and his marketing manager, Cathy McCourt. The followingconversation was recorded: BRIAN: Mark, as you know, we agreed that a profit of $15 per unit is needed for this new prod-uct. Also, as I look…
Dropping a product line, selling more tours. Nelson River Tours, a division of Old World Travel, offers two types of guided fishing tours, Beginner and Advanced. Operating income for each tour type in 2017 is as follows: The equipment has a zero disposal value. Guide wages, supplies, and vehicle fuel are variable costs with respect to the number of tours. Administrative salaries are fixed costs with respect to the number of tours. Dennis Baldwin, Nelson River Tours’ president, is concerned about the losses incurred on the Advanced tours. He is considering dropping the Advanced tour and offering only the Beginner tour.
Manhattan Corp
Brevard Industries produces two products. Information about the products is as follows: Product 1 Product 2 5,850 Units produced and sold Selling price per unit Variable costs per unit 11,900 18 13 20 14 The company's fixed costs totaled $B9,000, of which $16,900 can be directiy traced to Product 1 and $41.900 can be directly traced to Product 2. The effect on the firm's profits if Product 2 is dropped would be a: Multiple Cholce $42.600 increase. $17,600 decrease, $42,600 decrease. S17600 increase.
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: Green Beans Sweet Peas Tomatoes Sales $ 88,500 $ 128,000 $ 148,700 Variable costs 60,000 113,400 118,300 Contribution margin $ 28,500 $ 14,600 $ 30,400 Fixed costs allocated to each product line 12,580 19,840 29,360 Operating profit (loss) $ 15,920 $ (5,240) $ 1,040 Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line?
Company XYZ produces and sells scientific calculators. The company is currently producing and selling 10,000 units. At this level, the fixed expenses were $10,500. In order to expand sales, the company plans to reduce the selling price by $2, which is expected to improve unit sales by 40% and achieve fixed cost savings of $8,000. Given that the company does not pay commissions to its ?sales people, the variable expenses per unit are expected to remain the same. What would be the impact on profit 4 No change a O Decrease by $6,000 bo Increase by $2.000 cO Increase by $1,000 d O Decrease by $5,000 e O
Fido Company has three segments, one of which is unprofitable. The Duchess Doggy Biscuit segment had the following results last period: Sales $1,040,000 Variable expenses (640,000) Contribution margin 400,000 (540,000) Fixed expenses Net loss $(140,000) If the Duchess Doggy Biscuit segment is eliminated, 50% of the fixed expenses can also be eliminated, the other 50% will be reallocated. What will happen to company net income if this product line is eliminated? O Decrease by $400,000. ODecrease by $130,000. O Increase by $140,000. Increase by $270,000. 2-56 PM 11/10/2019 hp end dn 6d home ins prt sc delete 12 to
Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales pricea Variable costs b Fixed costs Production 50,600 $ 252 $ 108 $ 30,000,000 a For Production, this is the price to third parties. b For Packaging, this does not include the transfer price paid to Production. Packaging 25,300 $ 792 $ 300 $ 18,000,000 Suppose Production is located in Country A with a tax rate of 30 percent and Distribution in Country B with a tax rate of 10 percent. All other facts remain the same. a. Optimal transfer price b. Transfer price c. Transfer price Required: a. Current output in Production is 25,300 units. Packaging requests an additional 5,960 units to produce a special order. What transfer price would you recommend? b.…
Vikrambhai
Ortega Interiors provides design services to residential and commercial clients. The residential services produce a contribution margin of P450,000 and have traceable fixed operating costs of P480,000. Management is studying whether to drop the residential operation. If closed, the fixed operating costs will fall by P370,000 and Ortega's net income will increase or (decrease) by? (PUT NEGATIVE SIGN IF DECREASE)
Making pricing decisions Snappy Plants operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Snappy Plants has $5,100,000 in assets. Its yearly fixed costs are $650,000, and the variable Costs for the potting soil container label, seedling, and labor for each gallon-size plant total $1.90. Snappy Plants’s volume is currently 500,000 units. Competitors offer the same plants, at the same quality, to garden centers for $4.25 each. Garden centers then mark them up to sell to the public for $9 to $12, depending on the type of plant. Requirements Snappy Plants’s owners want to earn a 11% return on investment on the company’s assets. What is Snappy Plants’s target full product cost? Given Snappy Plants’s current costs, will its owners be able to achieve their target profit? Assume Snappy Plants has identified ways to cut its variable costs to $1.75 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the…

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