The following information is for X Company's two products - A and B: Sales Total contribution margin Fixed costs: Avoidable Unavoidable Profit Product A $93,000 39,990 21,000 5,000 $13,990 Product B $92,000 36,800 26,500 30,000 $-19,700 The company is considering dropping Product B because of the $19,700 loss. If X Company drops Product B, it will use the freed-up resources to increase sales of Product A by $16,000. If X Company drops Product B and increases sales of A, firm profits will change by
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- Central Industries has three product lines: A, B, and C. The information given below is available. Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C ?and does not replace it. What will happen to operating income Sales Variable costs Contribution margin. Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76.000 24,000 9,000 6.000 $9.000 Product B S90,000 48,000 42,000 18,000 9.000 $15.000 Product C $44,000 35,000 9,000 3,000 7.700 S(1.700) increase by $600 increase by S1,700 () decrease by S6,000 decrease by S9,000 ) increase by S2,400 ()QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Projected revenue Unit-level costs Batch-level costs Product-level costs Facility-level costs What is the differential revenue for this decision? Multiple Choice O $110.000 $85,000 $205,000 Alternative A $205,000 39,000 26,500 29,000 24,000 $290,000 Alternative B $290,000 50,000 38,000 31,000 26,500A company is considering two alternatives with the following costs: Alternative 1 Alternative 2Material costs$87,000 $87,000 Utilities costs$45,000 $44,100 Review costs$41,000 $44,100 Direct labor costs$51,000 $51,000 Identify the costs that are relevant and the costs that are not relevant, given the choice of alternatives. Calculate the differential cost between the alternatives.
- Central Industries has three product lines: A, B, and C. The information given below is available. Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C Pand does not replace it. What will happen to operating income Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76,000 24,000 9,000 6.000 $9.000 Product B $90,000 48.000 42,000 18,000 9,000 $15.000 Product C $44,000 35,000 9,000 3,000 7.700 $(1.700) increase by $600 increase by $1,700 decrease by S6,000 decrease by S9,000 () increase by $2,400 ()Cesar Company has three product lines: A, B and C. The information given below is available. Assume Cesar Company drops Product C. Cesar Company then doubles the production and sales of Product B without ?increasing fixed costs. What will happen to operating income Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A S100,000 76,000 24,000 9,000 6.000 $9.000 Product B $90,000 48,000 42,000 18,000 9,000 $15.000 Product C $44,000 35,000 9,000 3,000 7.700 S(1,700) increase by $18,000 O increase by ST15,000 () increase by $36,000 increase by $24,000 increase by $42,000 )Required information [The following information applies to the questions displayed below.] Information for Pueblo Company follows: Sales Revenue Less: Total Variable Cost Contribution Margin Product A $ 51,000 $ 11,500 $ 39,500 Target sales Product B $ 68,000 $ 30,150 $ 37,850 Required: The total fixed costs are $30,000. Determine target sales needed to earn a $26,000 target profit. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
- (e) Product Blue Product Red Selling $12.00 $24.00Variable cost $4.00 $8.00Contribution margin $8.00 $16.00Fixed costs apportioned $200,000 $400,00Budgeted Sales Units 140,000 60,000 Calculate the breakeven points, for each product and the company as a whole and comment on your findings f)Discuss the merits and demerits of the cost volume profit analysis (CVP)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. $39,000Pepper Industries has three product lines, A, B, and C. The following information is available: A B C Sales R60 000 R90 000 R24 000 Variable costs R36 000 R48 000 R15 000 Contribution margin R24 000 R42 000 R9 000 Fixed costs: Avoidable 9 000 18 000 6 000 Unavoidable 6 000 9 000 5 400 Operating income R9 000 R15 000 R(2 400) Pepper Industries is thinking of dropping product line C because it is reporting a loss. Assuming Pepper drops line C and does not replace it, the operating income will : decrease by R3 000 increase by R2 400 increase by R3 000 decrease by R5 400
- Anchor Company manufactures a variety of tool boxes. The firm is currently operating at 80% of its full capacity of 6,000 machine- hours per month. Each unit requires 30 minutes of machine time. Its sales manager has been looking for special orders to make productive use of the excess capacity. JCL Ltd., a potential customer, has offered to buy 10,000 tool boxes at $11.90 per box, provided that the entire quantity is delivered in two months. The current per-box cost data are as follows: Direct materials. Direct labour (½ hour at $10.40/hour) Total manufacturing overhead Total unit product cost $ 3.60 5.20 3.10 $11.90 Both fixed and variable overhead are allocated using direct labour-hours as a base. Variable overhead is $2.60 per direct labour-hour. Without the order, Anchor would have enough business to operate at 4,800 direct labour-hours in each of the next two months. The regular selling price of the tool boxes is $14.90. A sales commission of 50 cents per unit is paid to sales…Bates Company plans to add a new Item to its line of consumer product offerings. Two possible products are under consideration. Each unit of Product A costs $26 to produce and has a contribution margin of $13, while each unit of Product B costs $42 and has a contribution margin of $14. What is the differential revenue for this decision? Multiple Choice O O $29 $1 $17 $16Cesar Company has three product lines: A, B and C. The information given below is available. Assume Cesar Company drops Product C. Cesar Company then doubles the production and sales of Product B without ?increasing fixed costs. What will happen to operating income Product B Product C Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76,000 24,000 9,000 6,000 $9.000 $90,000 48,000 42,000 18,000 9,000 $15.000 $44,000 35,000 9,000 3,000 7,700 S(1,700) increase by $42,000 O increase by $18,000 increase by $36,000 increase by $15,000 ) increase by $24,000