Solution-Should any product line be eliminated-discontinued

Should any product line be eliminated-discontinued

Assignment Help Managerial Accounting

Reference no: EM133062444

Question - Salty Pretzels Corporation has three product lines, Cinnamon, Chocolate, and Sea salt. The following information is available:

	Cinnamon	Chocolate	Sea Salt
Sales	$100,000	$90,000	$88,000
Variable costs	76,000	48,000	79,000
Contribution margin	$24,000	$42,000	$9,000
Fixed costs:
Avoidable	9,000	18,000	3,000
Unavoidable	6,000	9,000	9,700
Operating income	$9,000	$15,000	$(3,700)

Required - Should any product line be eliminated/discontinued? Explain why or why not. Show all calculations.

If the Sea salt product line is discontinued and the space formerly used to produce the Sea salt product line is rented for $15,000 per year, will the operating income increase or decrease and by how much? Show your calculations.

Reference no: EM133062444

Questions Cloud

Variance of stock returns : The average return on this stock over the 3-year period was 14%. What was the variance of this stock's returns over the previous 3 years?

Determining the monthly payments : Assuming that fixed payments are to be made monthly for three years and that the loan is fully amortizing, what will be the monthly payments?

Collecting premiums from the client : Question 1. Corporate bonds issuers have the right to buy bonds back from before they mature. Bonds subject to this provision are called

What is erins ordinary income for the current tax year : What is Erins ordinary income for the current tax year and Consideration for entering into the agreement is $40,000. Is this capital or income in George's hand

Should any product line be eliminated-discontinued : Salty Pretzels Corporation has three product lines, Cinnamon, Chocolate, and Sea salt. Should any product line be eliminated/discontinued

Determine the minimum number of customers : Angola United Theaters, Inc. is considering opening a new movie theater in Angola, Indiana. The relevant cost of capital is 8%. The purchase, renovation, and mo

What is the rate of return : A company is deciding constructing an office block. The cost of land and construction cost is estimated to be $700,000. The real estate agent projects

Case-lee manufacturing : Lee Manufacturing's value of operations is equal to $900 million after a recapitalization. (The firm had no debt before the recap.) Lee raised $300 million in n

Discussing operating cash flow changes : Elobrate by discussing operating cash flow changes in net working capital and addition to fixed assets.

User Account

All Pages

Should any product line be eliminated-discontinued

Reference no: EM133062444

Reference no: EM133062444

Questions Cloud

Reviews

Write a Review

Managerial Accounting Questions & Answers

Manage budgets and financial plans

Prepare a retained earnings statement

Prepare a master budget for the three-month period

Construct the companys direct labor budget

Evaluate the predetermined overhead rate

Determine the company''s bid

Compute the pool rates for the different activities

Prepare Company financial statements

Prepare an analysis of terracycles

Discuss the ethical issues

Political resources in emerging markets

Management accounting - ehsan electronics company

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT