Homework Help is Here – Start Your Trial Now!
Business
Accounting
Villatech, Incorporated produces three models of tablet computers-the J-touch, B-touch, and L-touch. The company is considering eliminating the B-touch model because it has been incurring operating losses for the past few years. The J-touch and L-touch have impressive sales records and have the potential to grow in the future. Total L-touch $ 700,000 320,000 $ 380,000 B-touch $ 500,000 270,000 $ 230,000 105,000 $ 125,000 130,000 $ 2,000,000 1,040,000 $ 960,000 Segment margin 55,000 $325,000 182,000 230,000 $ 730,000 520,000 Less: Common fixed costs Net operating income (loss) $ 143,000 $ (5,000) $ 210,000 The management expects that the elimination of the B-touch would increase sales of the L-touch by 40%. If Villatech eliminates the B-touch, its net operating income will Sale Revenue Less: Variable costs Contribution margin Less: Direct fixed costs Multiple Choice Increase by $32,000 increase Decrease by $125,000 Increase by $27,000 Increase by $5,000 Decrease by $152.000 J-touch $ 800,000 450,000 $ 350,000 70,000 $ 280,000 208,000 72,000

Villatech, Incorporated produces three models of tablet computers-the J-touch, B-touch, and L-touch. The company is considering eliminating the B-touch model because it has been incurring operating losses for the past few years. The J-touch and L-touch have impressive sales records and have the potential to grow in the future. Total L-touch $ 700,000 320,000 $ 380,000 B-touch $ 500,000 270,000 $ 230,000 105,000 $ 125,000 130,000 $ 2,000,000 1,040,000 $ 960,000 Segment margin 55,000 $325,000 182,000 230,000 $ 730,000 520,000 Less: Common fixed costs Net operating income (loss) $ 143,000 $ (5,000) $ 210,000 The management expects that the elimination of the B-touch would increase sales of the L-touch by 40%. If Villatech eliminates the B-touch, its net operating income will Sale Revenue Less: Variable costs Contribution margin Less: Direct fixed costs Multiple Choice Increase by $32,000 increase Decrease by $125,000 Increase by $27,000 Increase by $5,000 Decrease by $152.000 J-touch $ 800,000 450,000 $ 350,000 70,000 $ 280,000 208,000 72,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
100%
Villatech, Incorporated produces three models of tablet computers-the J-touch, B-touch, and L-touch. The company is considering eliminating the B-touch model because it has been incurring operating losses for the past few years. The J-touch and L-touch have impressive sales records and have the potential to grow in the future. Sale Revenue Less: Variable costs Contribution margin Less: Direct fixed costs Total B-touch $ 500,000 270,000 $ 230,000 105,000 $ 125,000 130,000 $ 2,000,000 1,040,000 $ 960,000 230,000 $ 730,000 520,000 Segment margin Less: Common fixed costs Net operating income (loss) $ (5,000) $ 210,000 The management expects that the elimination of the B-touch would increase sales of the L-touch by 40%. If Villatech eliminates the B-touch, its net operating income will Multiple Choice Increase by $32,000 increase Decrease by $125,000 Increase by $27,000 Increase by $5,000 J-touch $ 800,000 450,000 $ 350,000 70,000 $ 280,000 208,000 72,000 Decrease by $152,000 L-touch $ 700,000 320,000 $ 380,000 55,000 $ 325,000 182,000 $ 143,000
Transcribed Image Text:Villatech, Incorporated produces three models of tablet computers-the J-touch, B-touch, and L-touch. The company is considering eliminating the B-touch model because it has been incurring operating losses for the past few years. The J-touch and L-touch have impressive sales records and have the potential to grow in the future. Sale Revenue Less: Variable costs Contribution margin Less: Direct fixed costs Total B-touch $ 500,000 270,000 $ 230,000 105,000 $ 125,000 130,000 $ 2,000,000 1,040,000 $ 960,000 230,000 $ 730,000 520,000 Segment margin Less: Common fixed costs Net operating income (loss) $ (5,000) $ 210,000 The management expects that the elimination of the B-touch would increase sales of the L-touch by 40%. If Villatech eliminates the B-touch, its net operating income will Multiple Choice Increase by $32,000 increase Decrease by $125,000 Increase by $27,000 Increase by $5,000 J-touch $ 800,000 450,000 $ 350,000 70,000 $ 280,000 208,000 72,000 Decrease by $152,000 L-touch $ 700,000 320,000 $ 380,000 55,000 $ 325,000 182,000 $ 143,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS