1) Baris Diary Co. has three product and divisions for production process of Milk, Yogurt and...

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1) Baris Diary Co. has three product and divisions for production process of Milk, Yogurt and Cheese. Company's data show following resulst for 2014: Milk Yogurt Revenue 100.000TL 125.000TL Cheese 75.000TL Total Variable costs (-) 60.000 50.000 60.000 Contribution Margin 40.000 75.000 15.000 Direct fixed costs (-) 5.000 15.000 6.000 Allocated fixed costs(-) 20.000 25.000 15.000 Operating Income 15.000 35.000 (6.000) Company's variable expenses are traced to product directly. Baris Diary Co. attributes indirect fixed costs based on sales amount of the products. Allocated cost is unavoidable, means when a product is dropped costs are allocated to other products. Since the production of cheese has a loss, company plans that this products should be dropped and discontinued. If this product is dropped the sales of Milk and Yogurt will increase by 30%. The 5.000TL of indirect cost consist of machinery and this machinery is rented and company will earn additional 5.000TL if the departmant is closed. Required: Prepare an incremental analysis showing the effect of closing the Cheese division on the company's income, and should be cheese department discontinued. Please indicate with your computation. 1) Baris Diary Co. has three product and divisions for production process of Milk, Yogurt and Cheese. Company's data show following resulst for 2014: Milk Yogurt Revenue 100.000TL 125.000TL Cheese 75.000TL Total Variable costs (-) 60.000 50.000 60.000 Contribution Margin 40.000 75.000 15.000 Direct fixed costs (-) 5.000 15.000 6.000 Allocated fixed costs(-) 20.000 25.000 15.000 Operating Income 15.000 35.000 (6.000) Company's variable expenses are traced to product directly. Baris Diary Co. attributes indirect fixed costs based on sales amount of the products. Allocated cost is unavoidable, means when a product is dropped costs are allocated to other products. Since the production of cheese has a loss, company plans that this products should be dropped and discontinued. If this product is dropped the sales of Milk and Yogurt will increase by 30%. The 5.000TL of indirect cost consist of machinery and this machinery is rented and company will earn additional 5.000TL if the departmant is closed. Required: Prepare an incremental analysis showing the effect of closing the Cheese division on the company's income, and should be cheese department discontinued. Please indicate with your computation.