Reference no: EM13503058
Tracy douglas is the owner and manager heritage garden furniture llc; a afica company that makes quality outdoor furtinure. she needs advice corcern the elinattion the model c3 lawn chair. these chair are not making money.
a absorption cost income statement for this company and 4 model c3 lawnchaire for the quarter ending in june 30 below/ sale- all product=2,900.000 model c3=300.000./ cost of goods direct material-759.00 model c3 122.000 direct labor 680k model c3 72,000 fringe benefit 20 percent of direct labor 136k model c3 = 14,400 variable manufacture overhead=28k model c3 = 3,600/ blding rent and mainatainc 30k model c3 4,000 depreciation = 75k model c3 = 19,1000/ total cost of goods sold= 1,708.000 model c3 235,1000/ gross margin= 1,192.000 model c3 = 64.900 selling and adm exp product managers salaries= 75k model c3 10k sale commission 5 percent of sale- 145k model c3= 15k fringe benfit 20 percent of salary and commission= 44k modelc3= 5,000 shipping 120k model c3 10k general adm exp=464k model c3= 48k/ total selling and admin exp=848k model c3= 88k net operating income= 344k model c3 = 23.1000. the following additional data have been supplies by the company/ a, direct labor is a variable cost.
b. all of the company product are manufacturer in the same faculty and use the same equipment. bldging rent and maintain and deperication are allocated to prduct using various base. the equipment do not wear.
c. there is a ample capacity to fill out orders.
d. dropping the model c3 lawchair would have no effect on sale of other product line. e. work in process and finish goods inventory are insignicant. f. shipping cost are trace directly to the products. general adm exp are allocated to product on the base of sale. there would be no effect on the total general adm expeneses if the model c3 lawnchair were drop. if the c3 model were drop the anager would be laid off.
question 1. given the current level of sale would u recommend that the model c3 lawchair be drop and why give reason.
question 2- what would sale of the model c3 lawchair have to be in order to retian the product.
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: Tracy douglas is the owner and manager heritage garden furniture llc; a afica company that makes quality outdoor furtinure. she needs advice corcern the elinattion the model c3 lawn chair. these chair are not making money.
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