Ch. 7 Incremental Analysis pg 467 Segment Income Statement Please provide the answer and explain the answer to the following question with the information given below. "Big Tent Company is trying to decide whether to keep or drop one of its outdoor wedding tents. The company's segmented income statement shows that this product is generating a net loss as follows:" Sales Revenue: $100,000 Less: Variable Costs $70,000 Contribution Margin $30,000 Less: Direct Fixed Costs $10,000 Segment Margin $20,000 Less: Allocated common fixed costs $30,000 Net Operating Income $(10,000) The company estimates that eliminating this product line will increase the contribution margin on a related product line by $25,000. Based on this information, what impact would dropping the line have on the company's overall profitability?

Ch. 7 Incremental Analysis pg 467 Segment Income Statement Please provide the answer and explain the answer to the following question with the information given below. "Big Tent Company is trying to decide whether to keep or drop one of its outdoor wedding tents. The company's segmented income statement shows that this product is generating a net loss as follows:" Sales Revenue: $100,000 Less: Variable Costs $70,000 Contribution Margin $30,000 Less: Direct Fixed Costs $10,000 Segment Margin $20,000 Less: Allocated common fixed costs $30,000 Net Operating Income $(10,000) The company estimates that eliminating this product line will increase the contribution margin on a related product line by $25,000. Based on this information, what impact would dropping the line have on the company's overall profitability?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1SEQ: Mario Company is considering discontinuing a product. The costs of the product consist of $20,000...

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Mario Company is considering discontinuing a product. The costs of the product consist of $20,000 fixed costs and $15,000 variable costs. The variable operating expenses related to the product total $4,000. What is the differential cost? A. $19,000 B. $15,000 C. $35,000 D. $39,000
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $360 $1,825 Less: Variable expenses 1,115 45 288 1,448 Contribution margin $165 $140 $72 $377 Less direct fixed expenses: Depreciation 50 15 12 77 Salaries 95 85 84 264 Segment margin $20 $40 $(24) $36 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped. Required: Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example,…
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $315 $1,780 Less: Variable expenses 1,115 45 221 1,381 Contribution margin $165 $140 $94 $399 Less direct fixed expenses: Depreciation 50 15 14 79 Salaries 95 85 120 300 Segment margin $20 $40 $(40) $20 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Convay. Enter amount in full, rather than in thousands. For example, "15000" rather than "15". Decrease v 75,000 x Should Petoskey keep or drop Conway? Кеep V
Problem#3 The Bach Company produces pffice chairs. The price of the chairs is $99.75 and the variable cost chair is $49.75 the following fixed cost is incurred: Depreciation of plant and equipment per year $20,000 Property Tax per year Variable Overhead $12,000 $5,200 Perform breakeven analysis of this company: b) What is the total cost function? c) What is the profit function? d) What is the breakeven point in units in number of chairs? e) What is the revenue ate the breakeven point? f) Estimate the profit when 1500 chairs are produced in a year? g) How many chairs must be sold for the company to make $750000 in a year?
Sales Less variable expense Contribution margin Less fixed expense Direct salaries Direct advertising Utilities* Depreciation-fixture** Rent*** Insurance General administrative Total fixed expense Income/Profit Drugs 125,000 50,000 75,000 29,500 1,000. 500 1,000 10,000 2,000. 15,000 59,000 Requirement 2: To utilize the idle capacity. $16.000 Requirement 1: Not to utilize the idle capacity Should the Houseware line be terminated? Cosmetics 75,000 25,000 50,000 12,500 7,500 500 2,000 6,000 500 9,000 38.000 $12.000 Houseware 50,000 30.000 20,000 8,000 6,500 1,000 2,000 4,000 500 6,000 28,000 Allocated cost based on space occupied. ** Depreciation on fixtures used for display of the various product lines. ***Allocated cost based on sales dollars. Insurance-represents insurance carried on inventories maintained within each of the three product line areas... General administrative-allocated to the product lines on the basis of sales dollars. Total admin costs. will not change if the…
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $300 $1,765 Less: Variable expenses 1,115 45 225 1,385 Contribution margin $ 165 $140 $ 75 $ 380 Less direct fixed expenses: Depreciation 50 15 10 75 Salaries 95 85 80 260 Segment margin $ 20 $ 40 $ (15) $ 45 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped. Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskey, these customers would…
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $405 $1,870 Less: Variable expenses 1,115 45 324 1,484 Contribution margin $165 $140 $81 $386 Less direct fixed expenses: Depreciation 50 15 12 77 Salaries 95 85 92 272 Segment margin $20 $40 $(23) $37 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000"…
Кееp-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Вoyne Conway Total Sales revenue $1,280 $185 $345 $1,810 Less: Variable expenses 1,115 45 276 1,436 Contribution margin $165 $140 $69 $374 Less direct fixed expenses: Depreciation 50 15 10 75 Salaries 95 85 88 268 Segment margin $20 $40 $(29) $31 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15". Decrease Should Petoskey keep or drop Conway? Keep Feedback Check My Work…
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $360 $1,825 Less: Variable expenses 1,115 45 252 1,412 Contribution margin $165 $140 $108 $413 Less direct fixed expenses: Depreciation 50 15 13 78 Salaries 95 85 120 300 Segment margin $20 $40 $(25) $35 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000"…
Current Attempt in Progress Marigold, Inc., a producer of shower products, is evaluating the profitability of its men's, women's, and children's product lines. According to the information below, the men's category is unprofitable. Sales Men's Shower Products Variable costs Contribution margin Fixed costs Operating income (loss) $136,000 94,000 42.000 58,000 $(16,000) Marigold has been having difficulty tapping into the men's market for shower products but strategically would like to have a very broad product offering. If it drops the men's product line, though, it could free up $30,000 in fixed costs. Having a bit more flexibility in its use of resources could be helpful in improving Marigold's other offerings
SEARCH ASK AN EXPERT CHAT MATH SOLVER Question The Variable Cost of Goods Sold in the Marin Company totals P325,000. Fixed selling and administrative expenses totaled P115,000 and variable selling and administrative expenses were P210,000. If Marin Company's contribution margin totaled P590,000, then sales is? Also, What is the effect of this in the company of Marin? a.P650,000 B.Ph 915,000 C.Ph 1,030,000 D.Ph 1,125,000 Topic: Cost Volume Profit Please explain each clearly and solve in good form.
Current Attempt in Progress 1 Crane Manufacturing incurs $38 of variable costs and $25 of allocated fixed costs in the production of an ergonomic backpack that normally sells for $92. A buyer in Canada offers to purchase 5,000 units at $59 each. Crane Manufacturing has excess capacity and can handle the additional production. What effect will acceptance of this offer have on the company's operating income? Differential Income/(Loss) $