Reference no: EM13206971
A can manufacturing company produces and sells three different types of cans: Versions X, Y, andZ. Ahigh-level, simpli fiedpro fit/lossstatementforthecompanyisprovidedhere. Corporate overhead (rent, general and administrative expense, etc.) is allocated equally among the three product versions. After reviewing the statement, company managers are concerned about the loss on Version Z and are considering ceasing production of that version. Should they do so? Why or why not?
Total
Version X Net Can Sales $180,000 Version Y $240,000 Version Z $105,000 $525,000
Variable Costs 105,000 135,000 45,000 322,50
Corporate Overhead 60,000 60,000 60,000 180,000
Contribution to Profit 15,000 82,500 37,5000 22,500
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