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Product | ||
T | U | |
Sales | $680,000 | $320,000 |
Costs: | ||
Variable costs | $540,000 | $220,000 |
Fixed costs | 145,000 | 40,000 |
Total costs | $685,000 | $260,000 |
Income (loss) | $ (5,000) | $ 60,000 |
Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T?
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- Sunland, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Bud Wise Er Total Units sold 7,800 13,000 5,200 26,000 Revenue $182,000 $130,000 $104,000 $416,000 Less variable costs 83,200 67,600 41,600 192,400 Less direct fixed costs 36,400 49,400 31,200 117,000 Less allocated fixed costs 15,600 26,000 10,400 52,000 Net income $46,800 $(13,000) $20,800 $54,600 All of the allocated costs will continue even if a division is discontinued. Sunland allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Sunland is concerned that it should be discontinued. Sunland thinks that if the division is closed, that sales at the Bud division will increase by 12% while sales at the Er division will stay the same. (a)…Manor Company plans to discontinue a department that has a contribution margin of$24,000and 548,000 in foed costs. of the fixed costs,$21,000cannot be avoided. The effect of this discontinuance on Manor's overall net operating income would be an: a increase of$24,000 b increase of$3,000 c. decrease of$3,000 d. decrease of$24,000Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 730,000 $ 350,000 $ 234,000 $ 161,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be: Multiple Choice о $15,000 О ($15,000) ($143,000) О $143,000
- Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow: Total Cups Pitchers Sales revenue $460,000 $310,000 $150,000 Variable expenses 355,000 235,000 120,000 Contribution margin 105,000 75,000 30,000 Fixed expenses 76,000 38,000 38,000 Operating income (loss) $29,000 $37,000 $(8,000) If $29,679 in fixed costs will be eliminated by dropping the Pitcher line, how will operating income be affected? If income drops, use a negative sign in front of the number.Last year Minden Company introduced a new product and sold 25, 300 units of it at aprice of $99 per unit. The product's variable expenses are $69 per unit and its fixedexpenses are $837,300 per year. Required: 1. What was this product's net operatingincome (loss) last year? 2. What is the product's break - even point in unit sales anddollar sales? 3. Assume the company has conducted a marketing study that estimates itcan increase annual sales of this product by 5.000 units for each $2 reduction in itsselling price. If the company will only consider price reductions in increments of $2 (e.g$68, $66, etc.), what is the maximum annual profit that it can earn on this product?What sales volume and selling price per unit generate the maximum profit? 4. Whatwould be the break - even point in unit sales and in dollar sales using the selling pricethat you determined in requirement 3?Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: sales variable expenses Contribution margin Fixed expenses $ 1,610,000 551,400 Net operating income (loss) 1,058,600 1,164,000 $ (105,400) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following Information: Sales East $410,000 Division Central $ 670,000 West $530,000 Variable expenses as a percentage of sales Traceable fixed expenses 52% 22% 36% $ 278,000 $ 326,000 $ 200,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-8. The Marketing Department has proposed increasing the West Division's monthly advertising by $27,000 based on the belief that it would increase that division's sales by 13%. Assuming these estimates are accurate, how much…
- The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales $ 830,000 Variable expenses $ 390,000 Fixed manufacturing expenses $ 266,000 Fixed selling and administrative expenses $ 232,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $111,000 of the fixed manufacturing expenses and $103,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued. What would be the financial advantage (disadvantage) from dropping product D74F?The following data are available for the Valentine Corporation for a recent month: Product A Product B Product C Total Selling price $23 $69 $115 Sales $115,000 $172,500 $287,500 |Variable |$91,000 $104,000 $27,000 Expenses Contribution $24,000 $68,500 $260,500 Margin Fixed $55,000 Expenses Net Operating Income What is the sales revenue required from Product C at the break even point?Required information [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses $ 1,600,000 700,000 900,000 660,000 Net operating income $4 240,000 Average operating assets $ 1,000,000 At the beginning of this year, the company has a $325,000 investment opportunity with the characteristics: Sales Contribution margin ratio Fixed expenses $ 520,000 70 % of sales $ 312,000 The company's minimum required rate of return is 15%. 9. If the company pursues the investment opportunity and otherwise performs the same as last year, wha (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%.)) ROI % ( Prev 1O Pr Ps to search RELS
- Required information Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales $ 1,500,000 Variable expenses 730, 000 Contribution margin 770, 000 Fixed expenses 470,000 Net operating income $ 300,000 Average operating assets $ 937,500 At the beginning of this year, the company has a $362, 500 investment opportunity with the following cost and revenue characteristics: Sales $ 580,000 Contribution margin ratio 70% of sales Fixed expenses $ 319,000 The company's minimum required rate of return is 10%. 8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)Crane Company has sales of $1,594,000 for the first quarter of 2022. In making the sales, the company incurred the following costs and expenses. Product costs Selling expenses $513,000 113,000 Administrative expenses 93,000 Variable Net Income $ Fixed $563,000 88,000 80,000 Calculate the company's net income under CVP for 2022.Below is the condensed income statement for Jay Tools for the past year: Product T1 T2 Sales $340,000 $160,000 Costs: Variable costs $270,000 $110,000 Fixed costs 80,000 20,000 Total costs $350,000 $130,000 Income (loss) $(10,000) $ 30,000 Since product T1 is not giving profit, Jay is considering discontinuing product T1 at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product T2. What is the amount of change in net income for the current year that will result from the discontinuance of Product T1? Select one: a. $70,000 increase. b. $50,000 increase. c. $50,000 decrease. d. $70,000 decrease. e. None of the above answers is correct.
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