Camera Corner is considering eliminating Model A E2 from its camera line because of losses over the
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Question:
Camera Corner is considering eliminating Model A E2 from its camera line because of losses over the past quarter. The past three months of information for Model AE2 are summarized below:
Sales (1,000 units)………………$300,000
Manufacturing costs:
Direct materials………………......150,000
Direct labor ($15 per hour)……….60,000
Overhead………………………..100,000
Operating loss……………...........($10,000)
Overhead costs are 720% variable and the remaining 30% is depreciation of special equipment for model AE2 that has no resale value.
If Model AE2 is dropped from the product line, operating income will (indicate the amount and increase or decrease).
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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