Assume the chocolate clusters are not dropped and the

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Reference no: EM13583317

A candy company makes Chocolate and Peanut clusters which produced the following results last year.
	Chocolate	Peanut	Total
Sales	$500,000	$600,000	$1,100,000
Variable costs	420,000	350,000	$770,000
Contribution margin	80,000	250,000	$330,000
Direct fixed costs	50,000	15,000	$65,000
Allocated fixed costs	45,000	55,000	$100,000
Net Income	($15,000)	$180,000	$165,000

A. Should the Chocolate be dropped?

B. Explain your answer for item (a).

C. What would happen to overall net income if the chocolate was dropped?

D. Assume the chocolate clusters are not dropped and the peanut lost 15% of its sales. What would be the effect on net income?

Reference no: EM13583317

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