A28 Mercer has three product lines in its retail stores: flipflops, sandals, and slippers. Results of the fourth quarter are presented below:Units soldRevenueVariable departmental costsDirect fixed costsAllocated fixed costsNet income (loss)Flipflops1,000$20,00017,0001,0007,000$(5,000)Sandals2,000$40,00022,0003,0007,000$8,000SlippersIf Mercer discontinues the Flipflops product line profit will2,00012,000$25,000 $85,0002,0007,000$4,000Total5,000Y51,0006,00021,000The allocated fixed costs are unavoidable. Demand of individual products are not affected by changes in other product lines.What will happen to profits if Mercer discontinues the Flipflops product line?$7,000by $

The decision to discontinue a product line is a strategic business choice that involves various…

Mercer has three product lines in its retail stores: flipflops, sandals, and slippers. Results of the fourth quarter are presented below: Units sold Revenue Variable departmental costs Direct fixed costs Allocated fixed costs Flipflops 1,000 $20,000 17,000 1,000 7,000 Sandals 2,000 $40,000 22,000 3,000 7,000 Slippers 2,000 $25,000 12,000 2,000 7,000 Total 5,000 $85,000 51,000 6,000 21,000

Mercer has three product lines in its retail stores: flipflops, sandals, and slippers. Results of the fourth quarter are presented below: Units sold Revenue Variable departmental costs Direct fixed costs Allocated fixed costs Flipflops 1,000 $20,000 17,000 1,000 7,000 Sandals 2,000 $40,000 22,000 3,000 7,000 Slippers 2,000 $25,000 12,000 2,000 7,000 Total 5,000 $85,000 51,000 6,000 21,000

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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