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Question 4 Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens...

Question 4

Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $495,000, variable expenses of $363,000, and fixed expenses of $148,000. Therefore, the gloves and mittens line had a net loss of $16,000. If Gator eliminates the line, $39,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (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 $ $ $
Variable costs
Contribution margin
Fixed costs
Net income / (Loss) $ $ $
The analysis indicates that Gator should

eliminate/not eliminate

the gloves and mittens line.
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Answer #1

Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (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 $495000 $0 -495000
Variable costs -363000 0 363000
Contribution margin 132000 0 -132000
Fixed costs -148000 -39000 109000
Net income / (Loss) -16000 -39000 -23000
The analysis indicates that Gator should

not eliminate

the gloves and mittens line.
0 0
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