Party Supply is trying to decide if they should continue its costume segment. The information shown is available for Party Supply’s business segments. Assume that neither the Direct Fixed Costs nor the Allocated Common Fixed Costs may be eliminated, but will be allocated to the two remaining segments. Costumes Party Supplies Floral Decorations Sales $160,000 $110,000 $210,000 Variable Costs 84,000 50,000 120,000 Contribution Margin 76,000 60,000 90,000 Direct Fixed Costs 50,000 20,000 25,000 Allocated Common Fixed Costs 30,000 25,000 30,000 Net Income (Loss) (4,000) 15,000 35,000 If costumes are dropped, what change will occur to profit?

Party Supply is trying to decide if they should continue its costume segment. The information shown is available for Party Supply’s business segments. Assume that neither the Direct Fixed Costs nor the Allocated Common Fixed Costs may be eliminated, but will be allocated to the two remaining segments. Costumes Party Supplies Floral Decorations Sales $160,000 $110,000 $210,000 Variable Costs 84,000 50,000 120,000 Contribution Margin 76,000 60,000 90,000 Direct Fixed Costs 50,000 20,000 25,000 Allocated Common Fixed Costs 30,000 25,000 30,000 Net Income (Loss) (4,000) 15,000 35,000 If costumes are dropped, what change will occur to profit?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 8EA: Party Supply is trying to decide whether or not to continue its costume Segment. The information...

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1/1 - CengageNOWv2 | Online teachin X enow.com/ilrn/takeAssignment/takeAssignmentMa.ao?invoker=&takeAssignmentSessionLocator=&inprogress=false Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supply's business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated, but will be allocated to the two remaining segments. Party Floral Costumes Supplies Decorations Sales $160,000 $109,000 $209,000 Variable costs 83,000 51,000 120,000 Contribution margin $77,000 $58,000 $89,000 Direct fixed costs 50,000 20,000 25,000 Allocated common fixed costs 31,000 25,000 31,000 $(4,000) $13,000 $32,000 Net income If costumes are dropped, whahchange will occur to profit? Profit will by $ Next
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	Costumes	Party Supplies	Floral Decorations
Sales	$160,000	$110,000	$210,000
Variable Costs	84,000	50,000	120,000
Contribution Margin	76,000	60,000	90,000
Direct Fixed Costs	50,000	20,000	25,000
Allocated Common Fixed Costs	30,000	25,000	30,000
Net Income (Loss)	(4,000)	15,000	35,000