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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James is considering replacing his worn-out machines. Which of the following is not a relevant cost for James when considering various available options? Select one: a. Changes in costs of labour needed to operate the new machines. b. Costs of acquiring the current worn-out machines. c. Costs of delivering the new machine. d. Costs of replacing old machines. e. None of the above answers is correct.
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Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special order for 4,000 pairs of weight-lifting gloves. Feinan Sports was not operating at capacity and could use the extra business. Unfortunately, the order's offering price of $12.70 per pair was below the cost to produce them. The controller was opposed to taking a loss on the deal. However, the personnel manager argued in favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a pair of weight-lifting gloves is presented below. Direct materials $ 7.40 Direct labor 3.80 Variable overhead 1.60 Fixed overhead 3.10 $15.90 Total No variable selling or administrative expenses would be associated with the order. Non-unit- level activity costs are a small percentage of total costs and are therefore not considered.…
be discontinued. The special equipment used to produce the trampolines has A common fixed cost that is allocated on the basis of sales pesos. supervisors assigned to the model would be discharged.. Management is concerned about the continued losses shown by the round trampolines and wants a recommendation as to whether or not the line should no resale value. If the round trampoline model is dropped, the two line Problem 2, page 313-Crystal Sports Equipment (Eliminate or Retain Product Line) Requirement: Compute the increase/decrease in net operating income if the production and sale of the round trampolines is continued. Problem 2 (Eliminate or Retain a Product Line) Crystal Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales and expenses for the past month follow: Round P140,000 60,000 80,000 Trampoline Rectangular Octagonal P500,000 200,000 300,000 Total Sales Less variable expenses. Contribution margin.. Less fixed expenses: P360,000 P1,000,000…
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STARTOM Inc, manufactures sporting equipment, including weight-lifting gloves. Anationalsporting goods chain recently submitted a special order for 4,600 pairs of weight-lifting gloves. STARTOM JnC.was not operating at capacity and couldusethe extra business. Unfortunately, the order's offering price of $12.80 per pair was below the costto produce them. The controller was opposedto takingaloss onthe deal. However, the personnel manager arguedin favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs andwouldhelp maintainthe community image of the company. The full costto produce a pair of weight-lifting gloves is presented as follows: Direct materials - S7.50; Direct labor- $3.90; Variable overhead -$1.60; Fixed overhead - $3.10; Total - $16.10. No variable and selling or administrative expenses would be associated with the order. Non-unit level activity costs are a small percentage oftotal costs and are therefore not censidered Assume…
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