Solution-What will happen to profits

What will happen to profits

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Problem - Harmark has three product lines in its retail stores: kites, wind socks, and flags. Results of the fourth quarter are presented below:

	Kites	Wind Socks	Flags	Total
Units sold	1,000	2,000	2,000	5,000
Revenue	$22,000	$40,000	$23,000	$85,000
Variable departmental costs	17,000	22,000	12,000	51,000
Direct fixed costs	1,000	3,000	2,000	6,000
Allocated fixed costs	8,000	8,000	8,000	24,000
Net income (loss)	$(4,000)	$7,000	$1,000	$4,000

The allocated fixed costs are unavoidable. Demand of individual products is not affected by changes in other product lines.

Required - What will happen to profits if Harmark discontinues the Kites product line?

Reference no: EM132782766

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What will happen to profits

Reference no: EM132782766

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