Salty Pretzels Corporation has three product lines, Cinnamon, Chocolate, and Sea salt. The following information is...
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Salty Pretzels Corporation has three product lines, Cinnamon, Chocolate, and Sea salt. The following information is available: Cinnamon Chocolate Sea Salt Sales $100,000 $90,000 $88,000 76,000 $24,000 Variable costs 48,000 79,000 Contribution margin $42,000 $9,000 Fixed costs: 9,000 6,000 $9,000 Avoidable 18,000 3,000 Unavoidable 9,000 9,700 Operating income $15,000 $(3,700) Requirements: b. If the Sea salt product line is discontinued and the space formerly used to produce the Sea salt product line is rented for $15,000 per year, will the operating income increase or decrease and by how much? Show your calculations. Salty Pretzels Corporation has three product lines, Cinnamon, Chocolate, and Sea salt. The following information is available: Cinnamon Chocolate Sea Salt Sales $100,000 $90,000 $88,000 76,000 $24,000 Variable costs 48,000 79,000 Contribution margin $42,000 $9,000 Fixed costs: 9,000 6,000 $9,000 Avoidable 18,000 3,000 Unavoidable 9,000 9,700 Operating income $15,000 $(3,700) Requirements: b. If the Sea salt product line is discontinued and the space formerly used to produce the Sea salt product line is rented for $15,000 per year, will the operating income increase or decrease and by how much? Show your calculations.
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Answer rating: 100% (QA)
Operating profit will increase by 9000 Cinnamon Chocolate Sea salt Total Sales 1... View the full answer
Related Book For
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
Posted Date:
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