Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is availableregarding its canoe segment. Should management discontinue the manufacturing of canoes? Income Statement-Canoe SegmentSales ...$2,000,000Varlable costsDirect materlals.Direct labor.....Varlable overhead....$450,000500,000300,000Varlable selling and administrativeTotal varlable costs...Contribution margin..200,0001,450,000550,000Fixed costsDirect375,000Indirect ....300,000Total fixed costs675,000Net Income..S (125,000)

Fixed costs can be divided into direct fixed costs that are related to a specific product or segment…

Income Statement-Canoe Segment Sales ... $2,000,000 Varlable costs Direct materlals. Direct labor..... Varlable overhead.... $450,000 500,000 300,000 Varlable selling and administrative Total varlable costs... Contribution margin.. 200,000 1,450,000 550,000 Fixed costs Direct 375,000 Indirect .... 300,000 Total fixed costs 675,000 Net Income.. S (125,000)

Income Statement-Canoe Segment Sales ... $2,000,000 Varlable costs Direct materlals. Direct labor..... Varlable overhead.... $450,000 500,000 300,000 Varlable selling and administrative Total varlable costs... Contribution margin.. 200,000 1,450,000 550,000 Fixed costs Direct 375,000 Indirect .... 300,000 Total fixed costs 675,000 Net Income.. S (125,000)

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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