Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor.If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company'stotal fixed costs would be reduced by 15 percent.Segmented income statements appear as follows:Original$32,500Strawberry$43,50039,150ProductOrange$51,000SalesVariable costs22,75040,800$10,2007,500$ 9,750$ 4,3506,000$(1,650)Contribution margin4,700$ 5,050Fixed costs allocated to each product lineOperating profit (loss)$ 2,700Required:a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" ifthere is no effect.)Alternative:Status QuoDifferenceDropStrawberryRevenueLess: Variable costsContribution marginLess: Fixed costsOperating profit (loss)

The variable costs vary according to the production. So if…

Answered: Iropped, would be

Business

Accounting

Iropped, would be

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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Atlas Foods produces three supplemental food products simultaneously through a refining process costing $85,000. The joint products, Alfa and Betters, have a final selling price of $8 per pound and $5 per pound, respectively, after additional processing costs of $3 per pound of each product are incurred after the split-off point. Morefeed, a by-product, is sold at the split- off point for $2.50 per pound. Additional information are as follows: Alfa - 15,000 pounds of Alfa, a popular but relatively rare grain supplement of having a caloric value of 8,800 calories/pound. Betters - 5,000 pounds of Betters, a flavouring material high in carbohydrates with a caloric value of 12,000 calories/pound. Morefeed - 2,000 pounds of Morefeed, used as a cattle feed supplement with a caloric value of 1,000 calories/pound. Questions: 1. Assuming Atlas Foods does not inventory Morefeed, the by-product, the joint cost to be allocated to Betters using the net realizable method is?
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