The management of Wengel Corporation is considering dropping product B900. Data from the company's accounting system appear below Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $194,000 of the fixed manufacturing expenses and $168,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. $ 807,500 $ 419,500 $ 274,400 $ 234,200 Required: What would be the financial advantage (disadvantage) of dropping 890D? Should the product be dropped? Net operating income (loss) would by if product B90D were dropped Therefore, the product dropped

The management of Wengel Corporation is considering dropping product B900. Data from the company's accounting system appear below Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $194,000 of the fixed manufacturing expenses and $168,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. $ 807,500 $ 419,500 $ 274,400 $ 234,200 Required: What would be the financial advantage (disadvantage) of dropping 890D? Should the product be dropped? Net operating income (loss) would by if product B90D were dropped Therefore, the product dropped

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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4. Undertake a sensitivity analysis assessing the impact of operating leverage on net income based on the following two what-if scenarios for both the divisions. (Use appropriate formula and format the cells as 'currency'): a) Conservative scenario: What would be the projected net income (loss) if sales decrease by 40% in the fourth quarter? b) Optimistic scenario: What would be the projected net income (loss) if sales increase by 40% in the fourth quarter? 5. Assume that you are in the position of Cost Accountant in Fitness Fast Inc. Management seeks clarification from you on the notable differences in breakeven units between the two divisions, despite both divisions reporting identical total sales and net income for the period. Additionally, They are keen to understand the reasons behind the substantial disparities in the comparative data of the sensitivity analysis for the two divisions. Explain the reasons for such differences to management. (Write your answer in the Explanation…
Required information Skip to question [The following information applies to the questions displayed below.] Accents Associates sells only one product, with a current selling price of $150 per unit. Variable costs are 30% of this selling price, and fixed costs are $19,600 per month. Management has decided to reduce the selling price to $145 per unit in an effort to increase sales. Assume that the cost of the product and fixed operating expenses are not changed by this reduction in selling price. At the current selling price of $150 per unit, what dollar volume of sales per month is required for Accents to earn a monthly operating income of $10,400?
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Product AG52 has revenues of $748,000, variable cost of goods sold of $640,000, variable selling expenses of $90,000, and fixed costs of $50,000, creating a loss from operations of $32,000. Required: 1. Prepare a differential analysis as of October 7 to determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. 2. Determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2).
Product A has revenue of $195,600, variable cost of goods sold of $114,200, variable selling expenses of $33,900, and fixed costs of $59,200, creating a loss from operations of $11,700. Prepare a differential analysis as of May 9, to determine whether Product A should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "O". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Continue Product A (Alt. 1) or Discontinue Product A (Alt. 2) May 9 Differential Effect Continue Product Discontinue Product on Income A (Alternative 1) A (Alternative 2) (Alternative 2) 195,600 -195,600 Revenues Costs: -114,200 X 114,200 X Variable cost of goods sold 33,900 X -33,900 X Variable selling expenses 59,200 X X 59,200 Fixed costs 11,700 -59,200 -47,500 Income (Loss)
1. COST BEHAVIOR ANALYSIS During this pandemic, almost all business lines experienced income instability, as experienced by PIZZA CALIFORNIA. For this reason, the company strives to reduce costs that are not value added. Below are the estimated costs and expenses for period 1 and period 2. Assumption of Relevant Range of 10,000 to 20,000 units. COST / EXPENSE PERIODE I PERIODE IV Unit production/unit sold 12,000 18,000 Direct material used $ 45,000 $ 67,500 Direct Labor cost 33,000 49,500 Production supervisors salaries 13,500 13,500 Directors salaries 26,500 26,500 Depreciation expense - factory building 11,500 11,500 Depreciation expense - factory equipment 7,700 7,700 Overtime Premium 49,500 74,250 Marketing person salaries 30,000 43.000 Utilities expense - factory 25,,480 34,720 Rent expense - store 2,700 2,700 Property tax - factory 2,300 2,300 Indirect…
Current business segment operations for Whitman, a mass retailer, are presented below. Merchandise Automotive Restaurant Total $500,000 $400,000 $100,000 $1,000,000 200,000 300,000 70,000 570,000 Sales Variable costs Fixed costs 50,000 250,000 Operating income (loss) $100,000 $100,000 $-20,000 $180,000 Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current levels. What will Whitman's total contribution margin be if the Restaurant segment is discontinued? Select one: a. $380,000 b. $367,650 X c. $160,000 d. $220,000 100,000 100,000
Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $330,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 1,097, 600 784,000 313,600 376,000 $ (62,400) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated?
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Product Alpha has revenue of $101,590, variable cost of goods sold of $51,430, variable selling expenses of $21,010, and fixed costs of $36,680, creating a loss from operations of $7,530. Required: 1. Prepare a differential analysis as of December 10 to determine whether Product Alpha should be continued (Alternative 1) or discontinued (Alternative 2), assuming that fixed costs are unaffected by the decision. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. 2. Determine if Product Alpha should be continued (Alternative 1) or discontinued (Alternative 2). Prepare a differential analysis as of December 10 to determine whether Product Alpha should be continued (Alternative 1) or discontinued (Alternative 2), assuming that fixed…