Question

Smyth Corporation is considering dropping product C78D. Data from the company's accounting system appear below: Sales...

Smyth Corporation is considering dropping product C78D. Data from the company's accounting system appear below:

Sales

$

803,200

Variable expenses

$

417,300

Fixed manufacturing expenses

$

273,000

Fixed selling and administrative expenses

$

233,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $193,000 of the fixed manufacturing expenses and $167,300 of the fixed selling and administrative expenses are avoidable if product C78D is discontinued.

What would be the financial advantage (disadvantage) of dropping C78D? Should the product be dropped?

Homework Answers

Answer #1
a.Calculation of net income (loss)
Amount($)
Sales                    8,03,200
Less: Variable expenses                    4,17,000
Fixed manufacturing expenses                    2,73,000
Fixed selling and administrative expenses                    2,33,000
Net Income (loss)                   -1,19,800
b. net income (loss) if the product is dropped.
Amount($)
Sales nil
variable expenses nil
fixed manufacturing expense (unavoidable) [273,000 - 193,000]                      -80,000
fixed selling and administrative expense [233,000 - 167,300]                      -65,700
Net Income                   -1,45,700
the financial DISADVANTAGE [145,700 - 1,19,800 =>$25,900] .
the product shall not be dropped.
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
Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales...
Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales $    800,000 Variable expenses $    381,000 Fixed manufacturing expenses $    263,000 Fixed selling and administrative expenses $    211,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $202,500 of the fixed manufacturing expenses and $117,500 of the fixed selling and administrative expenses are avoidable if product D14E is...
Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales...
Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales $ 740,000 Variable expenses $ 341,000 Fixed manufacturing expenses $ 257,000 Fixed selling and administrative expenses $ 205,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $199,500 of the fixed manufacturing expenses and $114,500 of the fixed selling and administrative expenses are avoidable if product D14E is discontinued. Required: a. According...
The management of Ismail Manufacturing Corporation is considering dropping product M12C. Data from the company's accounting...
The management of Ismail Manufacturing Corporation is considering dropping product M12C. Data from the company's accounting system appear below: Sales $550,000 Variable expenses $242,000 Fixed manufacturing expenses $250,000 Fixed selling and administrative expenses $150,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $170,000 of the fixed manufacturing expenses and $90,000 of the fixed selling and administrative expenses are avoidable if product M12C is discontinued. Determine the financial...
The management of Pooh Corporation is considering dropping product HNY. Data from the company's accounting system...
The management of Pooh Corporation is considering dropping product HNY. Data from the company's accounting system appear below: Sales $ 840,700 Variable expenses $ 436,800 Fixed manufacturing expenses $ 285,600 Fixed selling and administrative expenses $ 243,800 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $202,000 of the fixed manufacturing expenses and $175,100 of the fixed selling and administrative expenses are avoidable if product HNY is discontinued....
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system...
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales $ 935,000 Variable expenses $ 411,500 Fixed manufacturing expenses $ 349,000 Fixed selling and administrative expenses $ 256,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $213,500 of the fixed manufacturing expenses and $124,500 of the fixed selling and administrative expenses are...
15. The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting...
15. The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales $ 740,700 Variable expenses $ 384,800 Fixed manufacturing expenses $ 252,000 Fixed selling and administrative expenses $ 215,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $178,000 of the fixed manufacturing expenses and $154,300 of the fixed selling and administrative expenses are avoidable if product B90D is...
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system...
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: Sales $922,000 Variable expenses $405,000 Fixed manufacturing expenses $517,000 Fixed selling and administrative expenses $336,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $207,000 of the fixed manufacturing expenses and $118,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued. What would be the...
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system...
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales $ 940,000 Variable expenses $ 414,000 Fixed manufacturing expenses $ 354,000 Fixed selling and administrative expenses $ 261,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $216,000 of the fixed manufacturing expenses and $127,000 of the fixed selling and administrative expenses are...
The management of Cabo Corporation is considering dropping product V30T. Data from the company's accounting system...
The management of Cabo Corporation is considering dropping product V30T. Data from the company's accounting system appear below: Sales $933,000 Variable expenses $412,000 Fixed manufacturing expenses $347,000 Fixed selling and administrative expenses $254,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $214,000 of the fixed manufacturing expenses and $125,000 of the fixed selling and administrative expenses are avoidable if product V30T is discontinued. According to the company's...
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system...
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales $ 931,000 Variable expenses $ 410,000 Fixed manufacturing expenses $ 345,000 Fixed selling and administrative expenses $ 252,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $212,000 of the fixed manufacturing expenses and $123,000 of the fixed selling and administrative expenses are...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT