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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) Required: 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 B Revenue Less: Variable costs Contribution margin Green Beans $ 90,000 60,600 $ 29,400 13,180 $ 16,220 Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Less: Fixed costs Operating profit (loss) Status Quo Sweet Peas $ 132,500 116,400 $ 16,100 21,340 $ (5,240) Alternative: Drop Sweet Peas Tomatoes $ 154,700 121,300 $ 33,400 32,360 $ 1,040 Difference

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) Required: 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 B Revenue Less: Variable costs Contribution margin Green Beans $ 90,000 60,600 $ 29,400 13,180 $ 16,220 Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Less: Fixed costs Operating profit (loss) Status Quo Sweet Peas $ 132,500 116,400 $ 16,100 21,340 $ (5,240) Alternative: Drop Sweet Peas Tomatoes $ 154,700 121,300 $ 33,400 32,360 $ 1,040 Difference

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 13MC: Mallorys Video Supply has changed its focus tremendously and as a result has dropped the selling...
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S 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) Required: 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 B Revenue Less: Variable costs Contribution margin Green Beans $ 90,000 60,600 $ 29,400 13,180 $ 16,220 Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Less: Fixed costs Operating profit (loss) Status Quo Sweet Peas $ 132,500 116,400 $ 16,100 21,340 $ (5,240) Alternative: Drop Sweet Peas Tomatoes $ 154,700 121,300 $ 33,400 32,360 $ 1,040 Difference
Transcribed Image Text:S 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) Required: 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 B Revenue Less: Variable costs Contribution margin Green Beans $ 90,000 60,600 $ 29,400 13,180 $ 16,220 Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Less: Fixed costs Operating profit (loss) Status Quo Sweet Peas $ 132,500 116,400 $ 16,100 21,340 $ (5,240) Alternative: Drop Sweet Peas Tomatoes $ 154,700 121,300 $ 33,400 32,360 $ 1,040 Difference
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