Peas and Carrots, LLC manufactures running shoes. The company produces two products: Forrest and Jenny. The following annual operating information is available for each product line: Forrest Jenny Sales Revenue $230,000 $70,000 Variable Expenses (161,000) (56,000) Traceable Fixed Expenses (22,000) (12,500) Common Fixed Expenses (15,500) (10,000) Operating Income (Loss) $31,500 ($8,500) What would happen to the company's operating income if Jenny is dropped and the freed up capacity sits idle? increase by $11,250 decrease by $1,500 decrease by $14,000 increase by $8,500 None of the above.

Peas and Carrots, LLC manufactures running shoes. The company produces two products: Forrest and Jenny. The following annual operating information is available for each product line: Forrest Jenny Sales Revenue $230,000 $70,000 Variable Expenses (161,000) (56,000) Traceable Fixed Expenses (22,000) (12,500) Common Fixed Expenses (15,500) (10,000) Operating Income (Loss) $31,500 ($8,500) What would happen to the company's operating income if Jenny is dropped and the freed up capacity sits idle? increase by $11,250 decrease by $1,500 decrease by $14,000 increase by $8,500 None of the above.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Net operating income (loss) Fixed expenses Total $ 4,150,000 1,406,000 2,744,000 2,320,000 $ 424,000 Hardware $ 3,150,000 Department Linens $ 1,000,000 409,000 591,000 890,000 $ (299,000) 997,000 2,153,000 1,430,000 $ 723,000 A study indicates that $373,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 13% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?
S Conner's Fixtures produces and sells a single product, a specialized plumbing fixture. The business began operations on January 1 this year and its costs incurred during the year include the following: Variable costs (based on units produced): Direct materials cost Direct manufacturing labor costs Indirect manufacturing costs Administration and marketing Fixed costs: Administration and marketing costs Indirect manufacturing costs $ 24,000 108,000 21,600 13,500 72,000 24,000 At the end of the first year (December 31), direct materials inventory consisted of 7,500 pounds of material. Production in that year was 10,000 fixtures. All prices and unit variable costs remained constant during the year. Sales revenue for year 1 was $293,250. Finished goods inventory was $24.420 on December 31. Each finished fixture requires 3.20 pounds of material. Required: a. Compute the direct materials inventory cost, December 31. b. Compute the finished goods ending inventory in units (fixtures) on…
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Weedban $ 12,00 $ 2.80 $ 129,000 Product Sales Variable expenses Contribution margin Traceable fixed expenses Product line segment margin Common fixed expenses not traceable to products Net operating income Greengrow $.33.00 $12.00 $ 41,000 Last year the company produced and sold 41,000 units of Weedban and 22.500 units of Greengrow. Its annual common fixed expenses are $100,000. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Weedban Greengrow Company $ 5,289,500 $4,502,000 $ 607,500 3,270,000 143,500 270,000 2,019,500 4,448,500 427,500 2,019,500 $4,448,500 $ 427,500 $ 2,019,500
Mechem Corporation produces and sells a single product. In April, the company sold 2,000 units. Its total sales were $160,000, its total variable expenses were $78,600, and its total fixed expenses were $55,500. Required: a. Construct the company's contribution format income statement for April. b. Redo the company's contribution format income statement assuming that the company sells 1,900 units. Complete this question by entering your answers in the tabs below. Required a Required b Construct the company's contribution format income statement for April. (Do not round intermediate calculations.) 0 0
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,180,000 1,248,000 2,932,000 2,180,000 $ 752,000 Answer is complete but not entirely correct. $ (52,100) Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage) Department Hardware $ 3,100,000 830,000 2,270,000 1,380,000 $ 890,000 A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 12% decrease in the sales of the Hardware Department. Linens $ 1,080,000 418,000 662,000 800,000 $ (138,000)
Company Y produces and sells two packaged products Weedban and Greengrow Revenue and cost information related to the products follows: Weedban Greengrow SALES price per unit $9.00 $ 31.00 Variable expense per unit $2.90 $14.00 Traceable fixed expense per year $131,000 $44,000 Last year the company produced and sold 38,500 units of weed ban and 17,000 of Green grow. It's annual common fixed expenses are $106,000. Prepare a contribution format income statement segmented by-product lines ? Thank you,
Carlos's Bike Company produces two lines of cycles, Trikes and Bikes. At the end of last year, the income statement was as follows: Trikes $135,000 102,250 32,750 15,000 20,000 $(2,250) Sales revenue Variable expenses Contribution margin Direct expenses Allocated expenses Segment margin What was the company's total operating income? O $29,750 O $25,250 O $2,250 O $27,500 Bikes $250,000 162.500 87,500 35,000 25,000 $27,500
San Luis Obispo, California based SLOboards, Inc. manufactures a single line of paddleboards. For the year ended 12.31.21, SLOboards manufactured and sold a total of 1,000 boards. The following information was compiled for 2021 based on the 2021 production and sales volume: Sales Revenue . . . $500,000 Total Variable Costs . . . $200,000 Total Fixed Costs . . . $160,000 SLOboards is considering relocating its operations to Morro Bay, California in 2023. If the company relocates to Morro Bay, the sales price will not change. The variable cost per board in Morro Bay will decrease to $150, but the total annual fixed manufacturing costs will increase by $55,000. Which of the following statements is correct? A. If annual unit sales in 2023 are expected to be less than 1,100, the company should move its operations to Morro Bay. B. SLOboards' 2021 operating income was $85,000. C. If operations are moved to Morro Bay, the annual breakeven point…
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $4,250,000 1,215,000 3,035,000 2,330,000 $ 705,000 Department Hardware $ 3,100,000 803,000 2,297,000 1,480,000 $ 817,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Linens $1,150,000 412,000 738,000 850,000 $ (112,000) A study indicates that $372.000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 18% decrease in the sales of the Hardware Department.
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,070,000 1,273,000 2,797,000 2,220,000 $ 577,000 Financial (disadvantage) I Department Hardware $ 3,060,000 870,000 2,190,000 1,370,000 $ 820,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? A study indicates that $372,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 18% decrease in the sales of the Hardware Department. Linens $ 1,010,000 403,000 607,000 850,000 $ (243,000)
Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers who charge customers 75 cents per bottle. For the year 2014, management estimates the following revenues and costs: Sales Direct materials Direct labor 1,800,000 425,500 356,300 Manufacturing overhead - variable 311,800 Manufacturing overhead - fixed 288,200 Selling expenses - variable 68,900 Selling expenses - fixed 67,500 Administrative expenses - variable 93,714 63,400 Administrative expenses - fixed Required: Prepare a CVP income statement for 2014 based on manage mental estimates.
During its first year of operation Salon Manufacturing Company sold 1,000 units of inventory. Salon incurred variable product cost of $5.50 per unit and $1,875 of fixed manufacturing overhead costs. The sales price of the products was $7.50 per unit. Salon uses absorption costing. Based on this information Salon will report net income of (Do not round intermediate calculations.) $500 if the company made 1,250 units of product during the year $750 if the company made 1,500 units of product during the year. $1,000 if the company made 1,875 units of product during the year. All of the answers are correct.