Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas;...

 

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Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required: a. Prepare a differential cost schedule. Green Beans $ 91,000 61,000 $ 30,000 13,580 $ 16,420 b. Should Gilbert Canned Produce drop the sweet pea product line? Complete this question by entering your answers in the tabs below. Sweet Peas $ 135,500 118,400 $ 17,100 22,340 $ (5,240) Tomatoes $158,700 123,300 $ 35,400 34,360 $ 1,040 Required A Required B Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Alternative: Drop Status Quo Sweet Peas Difference Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Required: a. Prepare a differential cost schedule. Green Beans $ 91,000 61,000 $ 30,000 13,580 $ 16,420 b. Should Gilbert Canned Produce drop the sweet pea product line? Complete this question by entering your answers in the tabs below. Sweet Peas $ 135,500 118,400 $ 17,100 22,340 $ (5,240) Tomatoes $158,700 123,300 $ 35,400 34,360 $ 1,040 Required A Required B Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Alternative: Drop Status Quo Sweet Peas Difference