D-Home Company manufacturers three items: D1, D2 and D3. The management is considering dropping item D3...

 

Transcribed Image Text:

D-Home Company manufacturers three items: D1, D2 and D3. The management is considering dropping item D3 because it has an operating loss. Sales Revenues Variable Costs Contribution Margin D1 $ 52,000 (9,000) 43,000 (15,000) $ 28,000 D2 $ 90,000 (62,000) 28,000 (23,000) $ 5,000 D3 $ 75,000 (50,000) 25,000 (36,000) $ (11,000) Fixed Cost Net Income Requirements: 1- Assume the fixed costs are unavoidable, Should D-Home drop item D3? 2- Assume 75% the fixed costs are avoidable, Should D-Home drop item D3? D-Home Company manufacturers three items: D1, D2 and D3. The management is considering dropping item D3 because it has an operating loss. Sales Revenues Variable Costs Contribution Margin D1 $ 52,000 (9,000) 43,000 (15,000) $ 28,000 D2 $ 90,000 (62,000) 28,000 (23,000) $ 5,000 D3 $ 75,000 (50,000) 25,000 (36,000) $ (11,000) Fixed Cost Net Income Requirements: 1- Assume the fixed costs are unavoidable, Should D-Home drop item D3? 2- Assume 75% the fixed costs are avoidable, Should D-Home drop item D3?

Answer rating: 100% (QA)

co D Home The management it has an operating loss 997 Sales Revenue Variable cost Contribution m... View the full answer