Please do not give solution in image format thanku Sandhill Cereals, Inc, has four product lines. It is very concerned about one of its product lines, which reported unprohtable for thecurrent year as shown below:SalesVariable expensesFixed expensesNet loss$1,510,000946,000726,000$(162,000)If this product line was to be dropped, 40% of the fixed expenses can be eliminated. Using the decision-making framework, how muchare the relevant costs in the decision to eliminate this product line?Relevant costs in the decision to eliminate this product $

The main objective of managerial accounting is to maximize profits and minimize losses. It is a…

Answered: Sandhill Cereals, Inc, has four product…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 6E

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Bright Times Co. is considering closing the table lamp segment. Current revenue was $78,000, with variable costs of $50,000, and fixed costs of $40,000. What is differential income or loss from the table lamp segment and should it be discontinued?
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Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Required: Prepare a contribution format Income statement segmented by geographic market, as requested by the president. 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42, 000. Calculate the incremental net operating income. 2- b. Would you recommend the increased advertising?
The following information is for X Company's two products, A and B, last year: Product A Product B Sales $87,870 $92,940 Total variable costs 45,692 55,764 Total fixed costs 61,770 30,280 Profit $-19,592 $6,896 Because of the reported loss for Product A, X Company is considering dropping it. Further analysis reveals that $28,940 of Product A's fixed costs and $6,300 of Product B's fixed costs are common costs that the company allocates to the two products. 1. If X Company drops Product A, company profits will change by 2. Assume that sales of Product B can be increased by $18,690 if Product A is dropped. What will be the effect of this increase on company profits?
(c) Management is considering making a new product using product A's equipment. If the new product's selling price per unit were $10, its variable costs were $5, and its advertising costs were the same as for product A how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile? Units eTextbook and Media
Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 2,070,000 Variable expenses 895,880 Contribution margin 1,174,120 Fixed expenses 1,319,000 Operating loss $ (144,880 ) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Geographic Market South Central North Sales $ 607,000 $ 806,000 $ 657,000 Variable expenses as a percentage of sales 50 % 36 % 46 % Traceable fixed expenses $ 320,000 $ 480,000 $ 307,000 Required:1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. 2-a. The company’s sales manager believes that sales in the Central…
Gion Company is considering ellminating its Windows division, which reported a loss for the prior year of $92000 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 1,122,000 987,000 135,000 232,000 $ (97,000) If the Windows division is dropped, all of its variable costs are avoidable, and $150,800 of its fixed costs are avoidable. The impact on Glon's operating income from eliminating this business segment would be
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice ($10,000) $10,000 ($50,000) $50,000 Next
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice ($10,000) $50,000 ($50,000) $10,000
The management of Your Corporation is considering dropping a product. Data from the company's accounting system appear below: Sales $40,000 VC $15,000 Fixed manufacturing costs $19,000 Fixed selling and administrative costs $11,000 Investigation has revealed that $11,700 of the fixed manufacturing expenses and $6,300 of the fixed selling and administrative expenses will go away if the product is discontinued. What would be the effect on the company's overall net operating income if this product is dropped? Group of answer choices decrease by $7,000 increase by $7,000 increase by $13,000 decreased by $25,000 decreased by $13,000
A segment of a company reports the following loss for the year. All $192,500 of its variable costs are avoidable, and $93,000 of its fixed costs are avoidable. Segment Income (Loss) Sales $ 275,000 Variable costs 192,500 Contribution margin 82,500 Fixed costs 101,000 Income (loss) (18,500) (a) Compute the income increase or decrease from eliminating this segment.(b) Should the segment be eliminated?
The Draper Company is considering dropping its Dream bug toy due to continuing losses. Revenue and cost data on the toy for the past year follow: Sales of 15,000 units P 150,000 Variable expenses 120,000 Contribution margin 30,000 Fixed expenses 40,000 Net operating loss (P 10,000) If the toy were discontinued, then Draper could avoid P8,000 per year in fixed costs. 1. Under the given conditions, the change in annual operating income from discontinuing the production and sale of Doombugs would be: A) P 30,000 decrease B) P 10,000 increase C) P 22,000 decrease D) P 18,000 increase 2. Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent to discontinuing Doombugs or continuing the production and sale of Doombugs? A) 20,000 B) 18,000 C) 6,000 D) 4,000…

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