Xander's Muffins is trying to decide whether or not to continue a particular muffin flavour. The information shown is available for Xander's different muffin ranges. If the range is dropped, the business will still have to pay the direct fixed costs and the allocated common fixed costs. Raspberry white Blueberry Banana walnut chocolate Sales volume Sales price 500 units 500 units 500 units $4 per unit $5 per unit $4.50 per unit Variable costs $1.50 per unit $1.75 per unit $1.25 per unit Direct fixed costs 1,000 1,000 1,000 Allocated common 500 1500 500 fixed costs Net income -250 -875 125 What will be the net profit if the business drops the Raspberry and white chocolate muffins?
Xander's Muffins is trying to decide whether or not to continue a particular muffin flavour. The information shown is available for Xander's different muffin ranges. If the range is dropped, the business will still have to pay the direct fixed costs and the allocated common fixed costs. Raspberry white Blueberry Banana walnut chocolate Sales volume Sales price 500 units 500 units 500 units $4 per unit $5 per unit $4.50 per unit Variable costs $1.50 per unit $1.75 per unit $1.25 per unit Direct fixed costs 1,000 1,000 1,000 Allocated common 500 1500 500 fixed costs Net income -250 -875 125 What will be the net profit if the business drops the Raspberry and white chocolate muffins?
Chapter5: Evaluating Operating And Financial Performance
Section: Chapter Questions
Problem 16DQ
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Question
Transcribed Image Text:Xander's Muffins is trying to decide whether or not to continue a particular muffin flavour.
The information shown is available for Xander's different muffin ranges. If the range is
dropped, the business will still have to pay the direct fixed costs and the allocated common
fixed costs.
Raspberry white
Blueberry
Banana walnut
chocolate
Sales volume
Sales price
500 units
500 units
500 units
$4 per unit
$5 per unit
$4.50 per unit
Variable costs
$1.50 per unit
$1.75 per unit
$1.25 per unit
Direct fixed costs
1,000
1,000
1,000
Allocated common
500
1500
500
fixed costs
Net income
-250
-875
125
What will be the net profit if the business drops the Raspberry and white chocolate muffins?
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