Betty currently manages the polished chrome division of Bramble Broadway, a business that specializes in ceiling...
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Betty currently manages the polished chrome division of Bramble Broadway, a business that specializes in ceiling light fixtures. Its performance has been stable for the past few years. However, the crystal division has been losing market share, while the rustic iron and chrome divisions have been growing. For the most part, executives feel that these changes are a result of customer preferences and current trends versus the quality or prices of their products. While they expect preferences to return to the crystal product line in the next five years, a short-term decision must be made now. Budgeted financial information for Bramble Broadway's upcoming fiscal year is presented below for each division. Chrome Crystal Iron Sales $1,204,000 $437,000 $802,000 Variable costs 817,000 296,000 326,000 Contribution margin 387,000 141,000 476,000 Fixed costs 223,000 223,000 223,000 Operating income $164,000 $(82,000) $253,000 All fixed costs are currently assigned evenly to all divisions. (a) Your answer is correct. If Bramble Broadway drops the crystal light fixtures line, it will save $145,000 in fixed costs (the dedicated manager's salary). In this case, will Bramble be better or worse off financially if it drops the crystal product line? By how much? Bramble would be better off by $ 4000 eTextbook and Media Attempts: 1 of 3 used (b) Betty earns a bonus set at 5% of her product line's actual operating income. How much is she currently expecting for her bonus? If sales in the chrome line and the iron line turn out as expected, how much will Betty's bonus be if the crystal line is dropped? Current expected bonus Bonus if the crystal line is dropped $ Betty currently manages the polished chrome division of Bramble Broadway, a business that specializes in ceiling light fixtures. Its performance has been stable for the past few years. However, the crystal division has been losing market share, while the rustic iron and chrome divisions have been growing. For the most part, executives feel that these changes are a result of customer preferences and current trends versus the quality or prices of their products. While they expect preferences to return to the crystal product line in the next five years, a short-term decision must be made now. Budgeted financial information for Bramble Broadway's upcoming fiscal year is presented below for each division. Chrome Crystal Iron Sales $1,204,000 $437,000 $802,000 Variable costs 817,000 296,000 326,000 Contribution margin 387,000 141,000 476,000 Fixed costs 223,000 223,000 223,000 Operating income $164,000 $(82,000) $253,000 All fixed costs are currently assigned evenly to all divisions. (a) Your answer is correct. If Bramble Broadway drops the crystal light fixtures line, it will save $145,000 in fixed costs (the dedicated manager's salary). In this case, will Bramble be better or worse off financially if it drops the crystal product line? By how much? Bramble would be better off by $ 4000 eTextbook and Media Attempts: 1 of 3 used (b) Betty earns a bonus set at 5% of her product line's actual operating income. How much is she currently expecting for her bonus? If sales in the chrome line and the iron line turn out as expected, how much will Betty's bonus be if the crystal line is dropped? Current expected bonus Bonus if the crystal line is dropped $
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a To determine if Bramble Broadway would be better off financially by dropping the crystal product l... View the full answer
Related Book For
Systems Analysis And Design
ISBN: 978-1119496489
7th Edition
Authors: Alan Dennis, Barbara Wixom, Roberta M. Roth
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