Mission Company has three product lines: D, E, and F. The following information is available: D E F Sales revenue 83,000 42,000 24,000 Variable expenses 40,000 26,000 15,000 43,000 16,000 9,000 Fixed expenses 12,000 15,000 17,000 Operating income 31,000 1,000 $(8,000) Mission company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed expenses are unavoidable. Assuming Mission Company discontinues product line F and does not replace it, what affect will this have an operating income?
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Mission Company has three product lines: D, E, and F. The following information is available:
|
D |
E |
F |
Sales revenue |
83,000 |
42,000 |
24,000 |
Variable expenses |
40,000 |
26,000 |
15,000 |
|
43,000 |
16,000 |
9,000 |
Fixed expenses |
12,000 |
15,000 |
17,000 |
Operating income |
31,000 |
1,000 |
$(8,000) |
Mission company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed expenses are unavoidable. Assuming Mission Company discontinues product line F and does not replace it, what affect will this have an operating income?
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- Management and accounting Spencer Company is considering closing one of its product lines. Current data on the product line is as follows:DescriptionSales revenue $20,000Variable costs$17,000Direct avoidable fxed costs $7,000Indirect allocated fxed costs $5,000Net Income Loss on the product line ($9,000) *The direct avoidable fxed costs will be eliminated if the product line is closed. **The indirect allocated fxed costs will remain the same whether the product line is continued or closed.In addition, if Spencer closes the product line, Spencer can sublease its production facility to another company and earn subleaserevenue of $2,700 per year. Assume that Spencer decides to discontinue this product line. By how much will overall company net income change? Company net income will INCREASE by $9000Company net income will DECREASE by $9000Company net income will DECREASE by $6700Company net income will INCREASE by $6700The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $932,000 $410,000 $346,000 $253,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $212,000 of the fixed manufacturing expenses and $123,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued. What would be the financial advantage (disadvantage) from dropping product D740Management is considering the discontinuance of the manufacture and sale of Product G2 at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F1 and H3. What is the amount of change in net income for the current year that will result from the discontinuance of Product G2? P30,000 decrease P20,000 decrease P20,000 increase P30,000 increase