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 rela 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 i Operating profit (loss) Required: Prepare a diffe Green Beans $ 88,000 59, 800 $ 28, 200 12,380 $ 15,820 Sweet Peas $ 126,500 112,400 $ 14,100 19,340 $ (5,240) Tomatoes $ 146,700 117,300 $ 29,400 28, 360 $ 1,040

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 rela 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 i Operating profit (loss) Required: Prepare a diffe Green Beans $ 88,000 59, 800 $ 28, 200 12,380 $ 15,820 Sweet Peas $ 126,500 112,400 $ 14,100 19,340 $ (5,240) Tomatoes $ 146,700 117,300 $ 29,400 28, 360 $ 1,040

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: 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?
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