Les Objets Volants (LOJ), S.A., of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump product line for several years. The most recent quarterly income statement for the fuel pump product line follows: Sales Less: Variable expenses: LES OBJETS VOLANTS S.A. Income Statement-Fuel Pump For the Quarter Ended March 31 Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Less: Fixed expenses: Advertising Depreciation of equipment (no resale value) General factory overhead Salary of Insurance on inventories product-line manager. Purchasing department expenses Total fixed expenses Net operating loss. *Common costs allocated on the basis of machine-hours. *common costs allocated on the basis of sales dollars. Net advantage (disadvantage) of dropping the line € 320,000 66,000 14,000 Should the fuel pump product line be discontinued? 290,000 90,000 149,000* 38,000 18,000 65,000+ € 1,000,000 400,000 600,000 The currency in France is the euro, denoted by €. Discontinuing the fuel pump product line would not affect sales of other product lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses. Required: Compute the net advantage or disadvantage if the fuel pump product line be discontinued? (Negative amount should be indicated by a minus sign.) 650,000 (50,000)
Les Objets Volants (LOJ), S.A., of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump product line for several years. The most recent quarterly income statement for the fuel pump product line follows: Sales Less: Variable expenses: LES OBJETS VOLANTS S.A. Income Statement-Fuel Pump For the Quarter Ended March 31 Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Less: Fixed expenses: Advertising Depreciation of equipment (no resale value) General factory overhead Salary of Insurance on inventories product-line manager. Purchasing department expenses Total fixed expenses Net operating loss. *Common costs allocated on the basis of machine-hours. *common costs allocated on the basis of sales dollars. Net advantage (disadvantage) of dropping the line € 320,000 66,000 14,000 Should the fuel pump product line be discontinued? 290,000 90,000 149,000* 38,000 18,000 65,000+ € 1,000,000 400,000 600,000 The currency in France is the euro, denoted by €. Discontinuing the fuel pump product line would not affect sales of other product lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses. Required: Compute the net advantage or disadvantage if the fuel pump product line be discontinued? (Negative amount should be indicated by a minus sign.) 650,000 (50,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Les Objets Volants (LOJ), S.A., of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump
product line for several years. The most recent quarterly income statement for the fuel pump product line follows:
Sales
Less: Variable expenses:
LES OBJETS VOLANTS S.A.
Income Statement-Fuel Pump
For the Quarter Ended March 31
Variable manufacturing expenses
Sales commissions
Shipping
Total variable expenses
Contribution margin
Less: Fixed expenses:
Advertising
Depreciation of equipment (no resale value)
General factory overhead
Salary of product-line manager
Insurance on inventories
Purchasing department expenses
Total fixed expenses
Net operating loss
*Common costs allocated on the basis of machine-hours.
*common costs allocated on the basis of sales dollars.
Net advantage (disadvantage) of dropping the line
€ 320,000
66,000
14,000
Should the fuel pump product line be discontinued?
290,000
90.000
149,000*
38,000
18,000
65,000+
€ 1,000,000
€
400,000
600,000
The currency in France is the euro, denoted by €. Discontinuing the fuel pump product line would not affect sales of other product
lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses.
Required:
Compute the net advantage or disadvantage if the fuel pump product line be discontinued? (Negative amount should be indicated by
a minus sign.)
650,000
(50,000)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education