Question

Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...

Keep-or-Drop Decision

Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:

Alanson Boyne Conway Total
Sales revenue $1,280 $185 $360 $1,825
Less: Variable expenses 1,115 45 288 1,448
Contribution margin $165 $140 $72 $377
Less direct fixed expenses:
Depreciation 50 15 14 79
Salaries 95 85 120 300
Segment margin $20 $40 $(62) $2

Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.

Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped.

Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskey, these customers would go elsewhere to purchase Alanson.

Required:

Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".
$

Homework Answers

Answer #1

The answer has been presente din the supporting sheet. For detailed answer refer to the supporting sheet.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $420 $1,885 Less: Variable expenses 1,115 45 315 1,475 Contribution margin $165 $140 $105 $410 Less direct fixed expenses: Depreciation 50 15 15 80 Salaries 95 85 116 296 Segment margin $20 $40 $(26) $34 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $435 $1,900 Less: Variable expenses 1,115 45 348 1,508 Contribution margin $165 $140 $87 $392 Less direct fixed expenses: Depreciation 50 15 14 79 Salaries 95 85 108 288 Segment margin $20 $40 $(35) $25 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $315 $1,780 Less: Variable expenses 1,115 45 252 1,412 Contribution margin $165 $140 $63 $368 Less direct fixed expenses: Depreciation 50 15 13 78 Salaries 95 85 80 260 Segment margin $20 $40 $(30) $30 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $435 $1,900 Less: Variable expenses 1,115 45 326 1,486 Contribution margin $165 $140 $109 $414 Less direct fixed expenses: Depreciation 50 15 15 80 Salaries 95 85 120 300 Segment margin $20 $40 $(26) $34 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is...
Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given...
Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $285 $1,750 Less: Variable expenses 1,115 45 228 1,388 Contribution margin $165 $140 $57 $362 Less direct fixed expenses: Depreciation 50 15 9 74 Salaries 95 85 108 288 Segment margin $20 $40 $(60) $0 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses:    Machine rent (5,000) (20,000) (30,000) (55,000)    Supervision (15,000) (10,000) (5,000) (30,000)    Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (10,000) $150,000 Hickory's parquet flooring...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses:    Machine rent (5,000) (20,000) (30,000) (55,000)    Supervision (15,000) (10,000) (5,000) (30,000)    Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (10,000) $150,000 Hickory's management is...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses:    Machine rent (5,000) (20,000) (30,000) (55,000)    Supervision (15,000) (10,000) (5,000) (30,000)    Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (10,000) $150,000 Hickory's management is...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses:    Machine rent (5,000) (20,000) (30,000) (55,000)    Supervision (15,000) (10,000) (5,000) (30,000)    Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (10,000) $150,000 Hickory's management is...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses:    Machine rent (5,000) (20,000) (30,000) (55,000)    Supervision (15,000) (10,000) (5,000) (30,000)    Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (10,000) $150,000 Hickory's management is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT