Keep-or-Drop Decision Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement follows: Elk Walloon (Shown in 000's) Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation Advertising Torch $1,280 $185 1,115 $165 45 $140 15 2. Should Petoskey keep or drop Walloon? Keep $315 221 $94 85 11 50 95 Segment margin $20 $40 $(29) $31 Direct fixed expenses consist of depreciation and advertising. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different marketing campaign whose advertising would remain if the associated product were dropped. Required: Total 112 $1,780 1,381 $399 76 292 1. Conceptual Connection: Estimate the impact on profit that would result from dropping Wallon. Enter amount in full, rather than in thousands. For example, "15000" rather than "15". Decrease ✓

Keep-or-Drop Decision Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement follows: Elk Walloon (Shown in 000's) Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation Advertising Torch $1,280 $185 1,115 $165 45 $140 15 2. Should Petoskey keep or drop Walloon? Keep $315 221 $94 85 11 50 95 Segment margin $20 $40 $(29) $31 Direct fixed expenses consist of depreciation and advertising. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different marketing campaign whose advertising would remain if the associated product were dropped. Required: Total 112 $1,780 1,381 $399 76 292 1. Conceptual Connection: Estimate the impact on profit that would result from dropping Wallon. Enter amount in full, rather than in thousands. For example, "15000" rather than "15". Decrease ✓

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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