Marisol's Sunglass Company's western territory's forecasted income statement for the upcoming year is as follows:Sales revenue$840,000Variable costs(520,000)Contribution margin$320,000Fixed costs(480,000)$(160,000)Operating lossThe company's management is considering dropping the western territory and has determined that $310,000 of thefixed expenses is avoidable. What is the change in Marisol's Sunglass Company's forecasted operating for theupcoming year if the western territory is dropped? Assume the company predicts an operating loss across the entirecompany.OA. Operating loss will increase by $10,000.OB. Operating profit will increase by $320,000OC. Operating profit will decrease by $320,000.OD. Operating loss will decrease by $10,000.

The question asks for the change in Marisol's Sunglass Company's forecasted operating income if the…

Answered: Marisol's Sunglass Company's western…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12MC: Youngstown Construction plans to discontinue its rooting segment. Last year, this segment generated...

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Bryson Company's western territory's forecasted income statement for the upcoming year is as follows: Sales revenue $700,000 Variable costs 600,000 Contribution margin $100,000 Fixed costs 496,000 Operating income (loss) $(396,000) Bryson Company's management is considering dropping the western territory. If the company eliminates $396,000 of fixed costs by dropping the segment, the segment should be dropped.
(c) Management is considering making a new product using product A's equipment. If the new product's selling price per unit were $10, its variable costs were $5, and its advertising costs were the same as for product A how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile? Units eTextbook and Media
The following information is for X Company's two products, A and B, last year: Product A Product B Sales $87,870 $92,940 Total variable costs 45,692 55,764 Total fixed costs 61,770 30,280 Profit $-19,592 $6,896 Because of the reported loss for Product A, X Company is considering dropping it. Further analysis reveals that $28,940 of Product A's fixed costs and $6,300 of Product B's fixed costs are common costs that the company allocates to the two products. 1. If X Company drops Product A, company profits will change by 2. Assume that sales of Product B can be increased by $18,690 if Product A is dropped. What will be the effect of this increase on company profits?
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Bright Times Co. is considering closing the table lamp segment. Current revenue was $78,000, with variable costs of $50,000, and fixed costs of $40,000. What is differential income or loss from the table lamp segment and should it be discontinued?
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The condensed income statement for a business for the past year is as follows: Product T Product U Sales $500,000 $750,000 Less variable costs 400,000 550,000 Contribution margin 100,000 200,000 Less fixed costs 135,000 120,000 Income (loss) from operations $(35,000) $ 80,000 Management is considering discontinuing the manufacture and sale of Product T starting at the beginning of the current year. Discontinuing T will have no effect on total fixed costs or on the sales and expenses of Product U. What…
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Manor Company plans to discontinue a department that has a contribution margin of$24,000and 548,000 in foed costs. of the fixed costs,$21,000cannot be avoided. The effect of this discontinuance on Manor's overall net operating income would be an: a increase of$24,000 b increase of$3,000 c. decrease of$3,000 d. decrease of$24,000

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