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Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Green Beans $ 90,500 60,800 $ 29,700 13,380 $ 16,320 Required: . Prepare a differential cost schedule. . Should Gilbert Canned Produce drop the sweet pea product line? Sweet Peas $ 134,000 117,400 $ 16,600 21,840 $ (5,240) Tomatoes $ 156,700 122,300 $ 34,400 33,360 $ 1,040

Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Green Beans $ 90,500 60,800 $ 29,700 13,380 $ 16,320 Required: . Prepare a differential cost schedule. . Should Gilbert Canned Produce drop the sweet pea product line? Sweet Peas $ 134,000 117,400 $ 16,600 21,840 $ (5,240) Tomatoes $ 156,700 122,300 $ 34,400 33,360 $ 1,040

FINANCIAL ACCOUNTING
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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Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required A Required B Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Revenue Less: Variable costs Contribution margin Less: Fixed costs Green Beans $ 90,500 60,800 Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Operating profit (loss) Status Quo $ 29,700 13,380 $ 16,320 Alternative: Drop Sweet Peas Sweet Peas $ 134,000 117,400 $ 16,600 21,840 $ (5,240) Tomatoes $ 156,700 122,300 $ 34,400 33,360 $ 1,040 Difference
Transcribed Image Text:Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required A Required B Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Revenue Less: Variable costs Contribution margin Less: Fixed costs Green Beans $ 90,500 60,800 Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Operating profit (loss) Status Quo $ 29,700 13,380 $ 16,320 Alternative: Drop Sweet Peas Sweet Peas $ 134,000 117,400 $ 16,600 21,840 $ (5,240) Tomatoes $ 156,700 122,300 $ 34,400 33,360 $ 1,040 Difference
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