**Analysis of Movie Street's DVD Discontinuation Decision**Top managers of Movie Street are concerned about the company's operating losses and are contemplating discontinuing the DVD product line. The accounting team has provided an analysis to assist in the decision-making process.**Analysis Overview:**- **Expected Decrease in Revenues:** Enter the potential revenue loss from ceasing DVD sales.- **Expected Decrease in Costs:** - **Variable Costs:** Enter the potential savings in costs that vary with sales volume. - **Fixed Costs:** Enter potential savings in fixed costs, which Movie Street estimates to be $39,000 by discontinuing the DVD line.- **Expected Decrease in Total Costs:** Calculate the total cost savings from both variable and fixed cost reductions.- **Expected Change in Operating Income:** Calculate the net effect on operating income by balancing the decrease in revenues against the decrease in total costs.- **Decision:** Make a strategic decision based on the above analysis.**Data Table Explanation:**This section provides detailed figures from Movie Street's Income Statement for the year ending December 31, 2018. - **Net Sales Revenue:** - Total: $424,000 - Blu-ray Discs: $300,000 - DVD Discs: $124,000- **Variable Costs:** - Total: $248,000 - Blu-ray Discs: $153,000 - DVD Discs: $95,000- **Contribution Margin:** - Total: $176,000 - Blu-ray Discs: $147,000 - DVD Discs: $29,000- **Fixed Costs:** - **Manufacturing:** - Total: $130,000 - Blu-ray Discs: $74,000 - DVD Discs: $56,000 - **Selling and Administrative:** - Total: $60,000 - Blu-ray Discs: $50,000 - DVD Discs: $10,000- **Total Fixed Expenses:** - Total: $190,000 - Blu-ray Discs: $124,000 - DVD Discs: $66,000- **Operating Income (Loss):** - Total: $(14,000) - Blu-ray Discs:

Break-even analysis is a technique widely used by the production department. It helps to determine…

Top managers of Movie Street are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this decision: E (Click the icon to view the analysis.) Assume that Movie Street can avoid $39,000 of fixed costs by dropping the DVD product line (these costs are direct fixed costs of the DVD product line). Prepare a differential analysis to show whether Movie Street should stop selling DVDS. (Enter decreases to revenues with a parentheses or minus sign.) Expected decrease in revenues Data Table Expected decrease in costs: Variable costs Fixed costs Movie Street Income Statement Expected decrease in total costs For the Year Ended December 31, 2018 Expected in operating income Total Blu-ray Discs DVD Discs Decision: Net Sales Revenue 424,000 $ 300,000 $ 124,000 248,000 153,000 95,000 Variable Costs Contribution Margin 176,000 147,000 29,000 Fixed Costs: Manufacturing 130,000 74,000 56,000 60,000 50,000 10,000 Selling and Administrative Total Fixed Expenses 190,000 124,000 66,000 $ (14,000) $ 23,000 $ (37,000) Operating Income (Loss)

Top managers of Movie Street are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this decision: E (Click the icon to view the analysis.) Assume that Movie Street can avoid $39,000 of fixed costs by dropping the DVD product line (these costs are direct fixed costs of the DVD product line). Prepare a differential analysis to show whether Movie Street should stop selling DVDS. (Enter decreases to revenues with a parentheses or minus sign.) Expected decrease in revenues Data Table Expected decrease in costs: Variable costs Fixed costs Movie Street Income Statement Expected decrease in total costs For the Year Ended December 31, 2018 Expected in operating income Total Blu-ray Discs DVD Discs Decision: Net Sales Revenue 424,000 $ 300,000 $ 124,000 248,000 153,000 95,000 Variable Costs Contribution Margin 176,000 147,000 29,000 Fixed Costs: Manufacturing 130,000 74,000 56,000 60,000 50,000 10,000 Selling and Administrative Total Fixed Expenses 190,000 124,000 66,000 $ (14,000) $ 23,000 $ (37,000) Operating Income (Loss)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Mohave Corp. is considering eliminating a product from its Sand Trap line of beach umbrellas. This collection is aimed at people who spend time on the beach or have an outdoor patio near the beach. Two products, the Indigo and Verde umbrellas, have impressive sales. However, sales for the Azul model have been dismal. Mohave’s information related to the Sand Trap line is shown below. Segmented Income Statement for Mohave’s Sand Trap Beach Umbrella Products Indigo Verde Azul Total Sales revenue $ 60,000 $ 60,000 $ 30,000 $ 150,000 Variable costs 34,000 31,000 26,000 91,000 Contribution margin $ 26,000 $ 29,000 $ 4,000 $ 59,000 Less: Direct fixed costs 1,900 2,500 2,000 6,400 Segment margin $ 24,100 $ 26,500 $ 2,000 $ 52,600 Common fixed costs* 17,840 17,840 8,920 44,600 Net operating income (loss) $ 6,260 $ 8,660 $ (6,920 ) $ 8,000 *Allocated based on total…
Pls provide proper steps with explanation
Corning’s market value was below its book value because it was facing pricing pressure in the market, which reduced its ROIC. What are some ways to tell if pricing pressure is temporary – and if a company should wait it out – or permanent, and the company should consider shutting down?
Capital Motors, a car dealership, recently announced that itwill rely less on high-volume strategies such as discounts andrebates to improve its profitability. Another strategy it willemploy is to sell fewer cars to rental fleets, which eventuallyreturn the cars to Capital for sale at low auction prices. Howdo these types of sales affect Capital’s profitability?
Roxy Theatre is a monopoly. Roxy discovers that at the price that maximizes its profit, seniors are not coming to the theatre. So Roxy conducts a survey. The table reveals the results of the survey. Roxy decides to price discriminate among patrons who attend on weekends and those who attend on weekdays. Price (dollars per ticket) Weekends Quantity demanded (tickets per week) Weekdays 18.00 0 15.00 100 0 12.00 200 0 If the marginal cost of a show is $6.00, what price does Roxy charge on weekdays and what price does Roxy change on weekends to maximize profit? 9.00 300 0 6.00 300 200 3.00 300 300 If the marginal cost of a show is $6.00, Roxy will maximize profit by charging on weekdays and charging. a ticket on the weekend. a ticket
Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $46,500 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) If the backpack division is dropped, all $484,000 of its variable costs are avoidable, and $216,200 of its fixed costs are avoidable. The impact on Granfield's income from eliminating this business segment would be: Multiple Choice $494,000 decrease $216,200 increase $277,800 decrease $ 978,000 484,000 494,000 540,500 $ (46,500) $494,000 increase
Oman Flour Company provides its top managers with bonus on the basis of reported profit. During 2018 the management showed a decline in the final profit. In order to continue paying bonus the company attempt to adopt different accounting policies that resulted in higher profits. what suitable qualitative characteristics of useful financial information for in this case?
be discontinued. The special equipment used to produce the trampolines has A common fixed cost that is allocated on the basis of sales pesos. supervisors assigned to the model would be discharged.. Management is concerned about the continued losses shown by the round trampolines and wants a recommendation as to whether or not the line should no resale value. If the round trampoline model is dropped, the two line Problem 2, page 313-Crystal Sports Equipment (Eliminate or Retain Product Line) Requirement: Compute the increase/decrease in net operating income if the production and sale of the round trampolines is continued. Problem 2 (Eliminate or Retain a Product Line) Crystal Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales and expenses for the past month follow: Round P140,000 60,000 80,000 Trampoline Rectangular Octagonal P500,000 200,000 300,000 Total Sales Less variable expenses. Contribution margin.. Less fixed expenses: P360,000 P1,000,000…
Please don't give image format
Case Study: Phil Barely has his own business. He recently heard that there are different methods of valuing inventory and that some methods result in a lower net income, which can mean lower taxes. He sees a wonderful opportunity to minimize inventory value and net income by changing his inventory costing method each year. Directions: In writing explain to Phil why he would be violating an accounting principle if he implemented his idea. (Hint: Don’t forget to include the basis of your discussion, the accounting principle).
I need help with this accounting problem
Please don't give image based answer.. thanku