Reference no: EM131211258
Toxemia Salsa Company manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount):
Wimpy Mild Medium Hot Atomic
Contribution margin $(2000) $45,000 $35,000 $50,000 $162,000
Segment margin $(16,000) $(5000) $7000 $10,000 $94,000
Segment margin less allocated common fixed expenses
$(26,000) $(15,000) $(3000) $0 $84,000
Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue? A no flavors should be discontinued B wimpy C wimpy and mild D wimpy, mild, and medium.
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