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...

See similar textbooks

Similar questions

Want Answer
Management and accounting Spencer Company is considering closing one of its product lines. Current data on the product line is as follows:DescriptionSales revenue $20,000Variable costs$17,000Direct avoidable fxed costs $7,000Indirect allocated fxed costs $5,000Net Income Loss on the product line ($9,000) *The direct avoidable fxed costs will be eliminated if the product line is closed. **The indirect allocated fxed costs will remain the same whether the product line is continued or closed.In addition, if Spencer closes the product line, Spencer can sublease its production facility to another company and earn subleaserevenue of $2,700 per year. Assume that Spencer decides to discontinue this product line. By how much will overall company net income change? Company net income will INCREASE by $9000Company net income will DECREASE by $9000Company net income will DECREASE by $6700Company net income will INCREASE by $6700
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…
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…
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?
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
A segment of a company reports the following loss for the year. All $178,500 of its variable costs are avoidable, and $110,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 255,000 178,500 76,500 115,000 (38,500) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Required A Required B Compute the income increase or decrease from eliminating this segment. Segment Elimination Analysis Income Increase (Decrease) Sales Variable costs Contribution margin Fixed costs Income (loss) Continue Eliminate $ 255,000 178,500 76,500 115,000 $ (38,500)
Capri Construction plans to discontinue its roofing segment. last year, this segment generated a contribution margin of $65,000 and incurred $70,000 in fixed costs. discontinuing the segment will allow the company to avoid half of the fixed costs. what effect is expected to occur on the company's overall income (loss)? -$(30,000) please explain step by step how they got this answer. Thank you.
Please help me
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) enses margin Direct fixed expenses rgin C $2,247.000 $1,404,000 $1,809,300 $5,460,300 1,632,000 600,400 1,095,200 3,327,600 $615,000 $803,600 $714,100 $2,132,700 $517.000 $430,000 $520,000 $1,467,000 15,900 46,500 93,900 105,000 280,500 $626,800 $645,600 $1,794,000 $(11,800) $68,500 $338,700 A 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. Restate the income statement in segment margin format. Common fixed expenses 1: ofit B $ 10,000 $ 81,600 $521,600 $282,000 20,600 A Total $ B
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
(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

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Excel Applications for Accounting Principles

Accounting

ISBN:

9781111581565

Author:

Gaylord N. Smith

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Excel Applications for Accounting Principles

Accounting

ISBN:

9781111581565

Author:

Gaylord N. Smith

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS