What will happen to the companys operating income

Assignment Help Accounting Basics
Reference no: EM131959406

Problem

Suppose Wheatum is considering discontinuing its bran flakesbran flakes product line. Assume that during the past year, the bran flakes'bran flakes' product line income statement showed the following: Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the bran flakes bran flakes line is only one of the company's cereal operations, only $740,000 of direct fixed costs (the majority of which is advertising) will be eliminated if the product line is discontinued. The remainder of the fixed costs will still be incurred by the company. If the company decides to discontinue the product line, what will happen to the company's operating income? Should Wheatum discontinue the product line?

Reference no: EM131959406

Questions Cloud

What is the maximum amount that jared can defer : Ignoring the ADP Test requirements, what is the maximum amount that Jared can defer under the 401(k) plan in 2016?
Maintain a credit score of 700 or higher : Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700.
Comute the necessary numbers : As a result of the Thomas's suggustion will the break evenpoint go up or down. Comute the necessary numbers.
Explain why hr decisions are heavily regulated : Based on your analysis of current social forces, what new laws or regulations do you think will be passed or issued in the next few years?
What will happen to the companys operating income : If the company decides to discontinue the product line, what will happen to the company's operating income? Should Wheatum discontinue the product line?
Companies that operate outside of the us treat employees : Should companies that operate outside of the U.S. treat employees in other countries with the same standards as its U.S. employees?
What is the current status of ifrs from the sec perspective : What is the current status of IFRS from the SEC perspective? What is the current status of the convergence effor fro the FASB perspective?
Global brand vs a regional or local brand : How would the planning of a promotional program differ for a global brand vs. a regional or local brand?
Analyze the transactions and record journal entries : Analyze the transactions and record journal entries in General Journal. Record adjusting entries in General Journal and post to the general ledger accounts.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Ron benson is an new production manager after a great deal

ron benson is an new production manager. after a great deal of effort including considerable market research he

  Calculate the profit and loss of the futures transactions

Based on the following information, calculate the profit and loss you would make in each of the futures transactions listed in the Australian futures market.

  Discuss assets are resources that the company owns

In general, assets are resources that the company owns. There are many assets listed on most balance sheets. The first one is always cash as it is the most

  How much would be shown as the advertising expense

How much would be shown as the advertising expense in the statement of financial performance [income statement] for the current period

  Compute the annual depreciation expense

Compute the annual depreciation expense for 2006 and 2007, and book value at December 31, 2007, under the straight-line method.

  Determine the net present value of purchasing

Determine the Net Present Value of purchasing the new freezer using a required rate of return of 14%. Should bravo purchase the freezer?

  Property taxes are allocated based on the square footage

the property taxes are allocated based on the square footage each product uses in the factory

  Manufacturing overhead cost for the last period

Williams Company's direct labor cost is 25% of its conversion cost. If the Manufacturing overhead cost for the last period was $45,000 and the direct materials cost was $25,000, the direct labor cost was:

  Inventory balance of american fashions

Indicate the effect (direction and amount) of each transaction on the Inventory balance of American Fashions. Prepare the journal entries that American Fashions would record and show any computations

  Create an approach to tax research

Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

  What are the guidelines for each

What is the objective for attributing expected postretirement benefit obligations to years of service?

  Determine penguin taxable income and current ep

Penguin purchased seven-year MACRS property in the current year for $80,000. No?179 election was made. The property has a 10-year ADR midpoint life. Determine Penguin's taxable income and current E&P.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd