Question

In 200 words or more, Huang Inc. has one product line that is unprofitable. What circumstances...

In 200 words or more, Huang Inc. has one product line that is unprofitable. What circumstances may cause overall company net income to be lower if the unprofitable product line is eliminated?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer

Huang inc has one product that is unprofitable.

Circumstances may happen that the company have lower net income by elimination as the company should not eliminate the product if the Direct cost of the product greater than the selling price of the product.it means that if the elimination doesnot result in increase in net income of the company so the company should not go for elimination of the product directly.As there are many overhead cost involved which are fixed in nature and variable in nature.Fixed overheads are irrespective of the production so cancelling of one product will increase the cost of another products so this may cause lower net income if unprofitable product is eliminated

so the decision should be taken keeping all the factors in mind and all the elimination effects by cancelling the product

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Question: A manufacturing firm has discontinued production of a certain unprofitable product line. Considerable excess production...
Question: A manufacturing firm has discontinued production of a certain unprofitable product line. Considerable excess production capacity was created as a result. Management is considering devoting this excess capacity to one or more of three products: X1, X2, and X3. Machine hours required per unit are as follows:                                                                                           Product Machine Type X1 X2 X3 Milling machine 8 2 3 Lathe 4 3 0 Grinder 2 0 1 The available time in machine hours per week is...
In 200 words or more What is the relevance of the statement of cash flows? How...
In 200 words or more What is the relevance of the statement of cash flows? How are the balance sheet and income statement used to prepare the statement of cash flows? Give an example
RET Inc. currently has one product, low-priced stoves. RET Inc.  has decided to sell a new line...
RET Inc. currently has one product, low-priced stoves. RET Inc.  has decided to sell a new line of medium-priced stoves. Sales revenues for the new line of stoves are estimated at $50 million a year. Variable costs are 60% of sales.  The project is expected to last 10 years. Also, non-variable costs are $10,000,000 per year. The company has spent $4,000,000 in research and a marketing study that determined the company will lose (cannibalization) $10 million in sales a year of its...
RET Inc. currently has one product, low-priced stoves. RET Inc.  has decided to sell a new line...
RET Inc. currently has one product, low-priced stoves. RET Inc.  has decided to sell a new line of medium-priced stoves. Sales revenues for the new line of stoves are estimated at $50 million a year. Variable costs are 60% of sales.  The project is expected to last 10 years. Also, non-variable costs are $10,000,000 per year. The company has spent $4,000,000 in research and a marketing study that determined the company will lose (cannibalization) $10 million in sales a year of its...
Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has...
Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $10,000 from sales $200,000, variable costs $180,000, and fixed costs $30,000. If the Big Bart line is eliminated, $20,000 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Sales...
22. Praline Company is considering whether to discontinue one of its departments, and a study has...
22. Praline Company is considering whether to discontinue one of its departments, and a study has been conducted for this purpose. The contribution margin in the department is $200,000 per year. The fixed expenses charged to the department are $260,000 per year. It is estimated that $160,000 of these fixed expenses will be eliminated if the department is discontinued. If the department is discontinued, what is the effect on the company's overall net operating income? The overall net operating income...
Refer to the Pennington Products information below. Pennington Products has two product lines: R-100 and R-200....
Refer to the Pennington Products information below. Pennington Products has two product lines: R-100 and R-200. Revenue and cost information for each of the product lines are as follows: R-100 R-200 Selling price per unit $45 $75 Variable costs per unit $20 $35 Traceable fixed expenses $170 000 $380 000 Pennington has common fixed expenses of $250 000 per year. Last year, the company produced and sold 30 000 units of R-100 and 20 000 units of R-200. What is...
“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of...
“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.” Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who...
Income Statements Segmented by Territory Script, Inc., has two product lines. The September income statements of...
Income Statements Segmented by Territory Script, Inc., has two product lines. The September income statements of each product line and the company are as follows: SCRIPT, INC. Product Line and Company Income Statements For Month of September Pens Pencils Total Sales $25,000 $30,000 $55,000 Less variable expenses (10,000) (12,000) (22,000) Contribution margin 15,000 18,000 33,000 Less direct fixed expenses (8,000) (6,000) (14,000) Product margin $7,000 $12,000 $19,000 Less common fixed expenses (6,000) Net income $13,000 Pens and pencils are sold...
What has been the best Inventor we may use today? Why? Explain 200 words
What has been the best Inventor we may use today? Why? Explain 200 words
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT