Reference no: EM132558431

Cake Boss has the following income statement for 2019 : Cake Chocolate Red velvet Banana Cake Cake

Total Sales $ 50,000 $ 15,000 $ 40,000 $ 105,000

Cost of goods sold 24.000 8.000 19,000 51.000

Contribution margin $ 26,000 $ 7,000 $ 21,000 $ 54,000

Delivery and ordering costs 1,000 500 800 2,300

Rent ( per sq . metre used " ) 5,000 3,000 4,000 12,000

Allocated corporate costs 5.000 5.000 5.000 15.000

Corporate profit $ 15,000 $ ( 1,500 ) $ 11,200 $ 24,700

The company pays for the entire space and allocates based on sq . metres used .

Question a Do you recommend discontinuing the Red Velvet Cake product line ? Why or why not ?

Question b . If the Chocolate Cake product line had been discontinued , corporate profits for the current year would have decreased by what amount

Question c What factors should be taken into account is the company wants to eliminate any of the products ?