Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's...

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Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's most popular products appear below. Fishing 5ki Guard Golf Guard Total Guard $ 924,000 $264,000 $ 406,000 $ 254,0e0 208, e00 113,000 151,000 198, 00e Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 480, 000 159,000 95,e00 444, ee0 70, 20e 44,000 116, 100 184, 800 415,100 8,800 20,600 40,700 52,8e0 122,900 $ 28,900 S 28,1e0 $ 30e, eee $(29,20e) 40,600 7,400 38,800 81, 200 168, ee 20, 8ee 16,000 36,600 58,800 124, 200 Net operating income (loss) "Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the fishing guards and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce fishing guards has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the fishing guard model? 2. Should the production and sale of fishing guards be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's most popular products appear below. Fishing 5ki Guard Golf Guard Total Guard $ 924,000 $264,000 $ 406,000 $ 254,0e0 208, e00 113,000 151,000 198, 00e Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 480, 000 159,000 95,e00 444, ee0 70, 20e 44,000 116, 100 184, 800 415,100 8,800 20,600 40,700 52,8e0 122,900 $ 28,900 S 28,1e0 $ 30e, eee $(29,20e) 40,600 7,400 38,800 81, 200 168, ee 20, 8ee 16,000 36,600 58,800 124, 200 Net operating income (loss) "Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the fishing guards and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce fishing guards has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the fishing guard model? 2. Should the production and sale of fishing guards be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

Answer rating: 100% (QA)

Required 1 Discontinue Finishing Guard Savings in Advertising expense 2... View the full answer