Question Content Area Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company’s direct fixed costs can be avoided if a segment is dropped. The information is available for the segments. Custom Embroidery Logo Apparel Sales $60,000 $250,000 Variable costs 29,000 110,000 Contribution margin $31,000 $140,000 Direct fixed costs 22,000 39,000 Allocated common fixed costs 13,000 49,000 Net income $(4,000) $52,000 A. What will be the impact on net income if the embroidery segment is dropped? Net income $fill in the blank 1 B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? Contribution margin $fill in the blank 3 Net income $fill in the blank 5 C. Identify one cost that is not relevant in this analysis.
Question Content Area Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company’s direct fixed costs can be avoided if a segment is dropped. The information is available for the segments. Custom Embroidery Logo Apparel Sales $60,000 $250,000 Variable costs 29,000 110,000 Contribution margin $31,000 $140,000 Direct fixed costs 22,000 39,000 Allocated common fixed costs 13,000 49,000 Net income $(4,000) $52,000 A. What will be the impact on net income if the embroidery segment is dropped? Net income $fill in the blank 1 B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? Contribution margin $fill in the blank 3 Net income $fill in the blank 5 C. Identify one cost that is not relevant in this analysis.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 8PA: Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to...
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Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company’s direct fixed costs can be avoided if a segment is dropped. The information is available for the segments.
Custom
EmbroideryLogo
ApparelSales $60,000 $250,000 Variable costs 29,000 110,000 Contribution margin $31,000 $140,000 Direct fixed costs 22,000 39,000 Allocated common fixed costs 13,000 49,000 Net income $(4,000) $52,000
A. What will be the impact on net income if the embroidery segment is dropped?
Net income $fill in the blank 1
B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel?
Contribution margin $fill in the blank 3 Net income $fill in the blank 5 C. Identify one cost that is not relevant in this analysis.
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