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
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
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?
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
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…
Davis Manufacturing currently manufactures product A among other products. The following is the current profit breakdown for product A: Sales Variable Manufacturing Costs Variable Selling Costs Fixed Manufacturing Costs Fixed Selling Costs Profit (Loss) $365,000 $100,000 $75,000 $89,000 $112,000 $(11,000) Davis is considering dropping the product A division. If Davis drops the product 85% of the fixed manufacturing costs and 94% of the fixed selling costs will be eliminated. How much will profit increase or decrease if Davis drops product A? O Decrease $20,070 O Increase $11,000 O Increase $5,000 O Decrease $9,070
s
Greenview Dairies produces a line of organic yogurts for sale at supermarkets and specialty markets in the Southeast. Economic conditions and changing tastes have resulted in slowing demand growth. After recently expanding capacity, the company is now operating at 65 percent of the new capacity. The company is considering dropping one of the yogurt flavors, mixed berry, in hopes of improving profitability. If the mixed berry variety is dropped, the revenue associated with it will be lost and the related variable costs saved. The production manager estimates that the fixed costs will also be reduced by 30 percent. The following quarterly product line income statements (in thousands of dollars) are available: Product Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Vanilla $21,790 14,700 $7,090 3,095 $3,995 Peach $33,840 26,465 $7,375 4,655 $2,720 Mixed Berry $28,380 25,490 Complete this question by entering your answers in the…
Urmila ben

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