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Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply's business segments. Reception Supplies Bridal Dresses Floral Decorations $110,000 $210,000 120,000 Sales $160,000 Variable costs 84,000 Contribution margin 76,000 Direct fixed costs 50,000 Allocated common fixed costs 30,000 Net Income ($ 4,000) $ 15,000 $ 35,000 If reception supplies are dropped, floral decoration sales are expected to increase by 5%. What impact will the increase in floral decorations have on overall profitability? Income will increase by $19,000. Income will increase by $16,000. Income will decrease by $17,000. Income will decrease by $8,000. Income will decrease by $21,500. 50,000 60,000 20,000 25,000 90,000 25,000 30,000

Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply's business segments. Reception Supplies Bridal Dresses Floral Decorations $110,000 $210,000 120,000 Sales $160,000 Variable costs 84,000 Contribution margin 76,000 Direct fixed costs 50,000 Allocated common fixed costs 30,000 Net Income ($ 4,000) $ 15,000 $ 35,000 If reception supplies are dropped, floral decoration sales are expected to increase by 5%. What impact will the increase in floral decorations have on overall profitability? Income will increase by $19,000. Income will increase by $16,000. Income will decrease by $17,000. Income will decrease by $8,000. Income will decrease by $21,500. 50,000 60,000 20,000 25,000 90,000 25,000 30,000

FINANCIAL ACCOUNTING
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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Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply's business segments. Sales Variable costs Contribution margin Direct fixed costs Allocated common fixed costs Reception Supplies Bridal Dresses Floral Decorations $110,000 $210,000 50,000 120,000 60,000 20,000 25,000 $160,000 84,000 76,000 50,000 30,000 Net Income ($ 4,000) $ 15,000 $ 35,000 If reception supplies are dropped, floral decoration sales are expected to increase by 5%. What impact will the increase in floral decorations have on overall profitability? Income will increase by $19,000. Income will increase by $16,000. Income will decrease by $17,000. Income will decrease by $8,000. 90,000 Income will decrease by $21,500. 25,000 30,000
Transcribed Image Text:Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply's business segments. Sales Variable costs Contribution margin Direct fixed costs Allocated common fixed costs Reception Supplies Bridal Dresses Floral Decorations $110,000 $210,000 50,000 120,000 60,000 20,000 25,000 $160,000 84,000 76,000 50,000 30,000 Net Income ($ 4,000) $ 15,000 $ 35,000 If reception supplies are dropped, floral decoration sales are expected to increase by 5%. What impact will the increase in floral decorations have on overall profitability? Income will increase by $19,000. Income will increase by $16,000. Income will decrease by $17,000. Income will decrease by $8,000. 90,000 Income will decrease by $21,500. 25,000 30,000
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