Problem 8-55 1. Prepare a segmented Income Statement and separate direct and common fixed costs. Blenders Coffe Makers Total Sales Less: Variable cost of goods sold Contribution margin Less: Direct fixed expenses Segment margin Less: Common fixed expenses 213,500 Operating income 2. What is the effect on Alard's profit if the coffee maker line is dropped? If the blender line is dropped? Drop blender line: Drop the coffee maker line: 3. What is the effect on firm PROFITS if an additional 10,000 blenders could be produced (using existing capacity) and sold for $21.50 on a special-order basis? Assume existing sales would not be affected by the speical order. Answer:
Problem 8-55 Segmented Income Statements, Product-Line Analysis:
Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled 340,000, of which 184,000 can be avoided if the blenders are not produced and 142,500 can be avoided if the coffee makers are not produced. Revenue and variable cost information follows:
Blenders Coffee Makers
Selling price per applinace: $24 $29
Variable expenses per appliance: 18 27
ANSWER THE FOLLIWING QUESTIONS USING THE TEMPLATES PROVIDED!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 4 images
