The following information is for X Company's two products, A and B, last year:Product AProduct BSales$87,870$92,940Total variable costs 45,69255,764Total fixed costs61,77030,280Profit$-19,592$6,896Because 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 ofProduct B's fixed costs are common costs that the company allocates to the twoproducts.1. If X Company drops Product A, company profits will change by2. Assume that sales of Product B can be increased by $18,690 if Product A isdropped. What will be the effect of this increase on company profits?

Answer 1Computation of current total profit Product AProduct…

Answered: The following information is for X…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12MC: Youngstown Construction plans to discontinue its rooting segment. Last year, this segment generated...

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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?
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: 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? 3. Suppose that if the Doombug toy is dropped, the production and sale of other Draper toys would increase so as to generate a P16,000 increase in the contribution margin received from these…
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…
Trebecker Construction plans to discontinue its roofing segment which last year generated a contribution margin of $65,000 and incurred $90,000 in fixed costs. If the segment is discontinued, half of the fixed costs will be avoided. What effect is expected to occur to the company’s overall profit? A decrease of $20,000 A decrease of $15,000 An increase of $15,000 An increase of $20,000 An increase of $30,000
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Phan Company has not reported a profit in five years. This year the company would like to narrow its loss to $18,000. Assuming its selling price is $42.50 per unit and its variable costs per unit are $30, how many units must be sold to achieve its target given that total fixed costs are $69,000? (Do not round intermediate calculations.) ook Multiple Choice rences 4,448 5,520 3,712 4,080
Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows: Sales Variable expenses Contribution margin Advertising expense Depreciation expense Corporate expenses Total fixed expenses Operating income A $2,247,000 1,632,000 $615,000 $517,000 15,900 93,900 $626,800 $(11,800) B $1,404,000 600,400 $803,600 $430,000 10,000 81,600 $521,600 $282,000 C $1,809,300 1,095,200 $714,100 $520,000 20,600 105,000 $645,600 $68,500 Total $5,460,300 3,327,600 $2,132,700 $1,467,000 46,500 280,500 $1,794,000 $338,700 Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees.
Last year Minden Company introduced a new product and sold 25, 300 units of it at aprice of $99 per unit. The product's variable expenses are $69 per unit and its fixedexpenses are $837,300 per year. Required: 1. What was this product's net operatingincome (loss) last year? 2. What is the product's break - even point in unit sales anddollar sales? 3. Assume the company has conducted a marketing study that estimates itcan increase annual sales of this product by 5.000 units for each $2 reduction in itsselling price. If the company will only consider price reductions in increments of $2 (e.g$68, $66, etc.), what is the maximum annual profit that it can earn on this product?What sales volume and selling price per unit generate the maximum profit? 4. Whatwould be the break - even point in unit sales and in dollar sales using the selling pricethat you determined in requirement 3?
Subject: accounting
Phan Company has not reported a profit in five years. This year the company would like to narrow its loss to $7,500. Assuming its selling price is $36.50 per unit and its variable costs per unit are $24, how many units must be sold to achieve its target given that total fixed costs are $60,000?
A company wants to determine the optimal replacement policy for its equipment. New equipment costs $10,000. The company does not keep their equipment longer than 2 years and has estimated the annual operating costs and trade-in values for equipment during each of the 2 years as: Age in years 0 to 1 1 to 2 Operating Cost $5,000 $7,000 Trade-in Value $8,000 $6,000 What is the net replacement cost at year 3 if the company used the equipment for two years from year 1? c. $11,000 d. $9,000 a. $16,000 b. $14,000
Marisol's Sunglass Company's western territory's forecasted income statement for the upcoming year is as follows: Sales revenue $840,000 Variable costs (520,000) Contribution margin $320,000 Fixed costs (480,000) $(160,000) Operating loss The company's management is considering dropping the western territory and has determined that $310,000 of the fixed expenses is avoidable. What is the change in Marisol's Sunglass Company's forecasted operating for the upcoming year if the western territory is dropped? Assume the company predicts an operating loss across the entire company. OA. Operating loss will increase by $10,000. OB. Operating profit will increase by $320,000 OC. Operating profit will decrease by $320,000. OD. Operating loss will decrease by $10,000.

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