Fudge Factory has three product lines, Chocolate, Penuche, and Peanut Butter. The following information is available:...

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Fudge Factory has three product lines, Chocolate, Penuche, and Peanut Butter. The following information is available: $100,000 76,000 $24,000 Chocolate Penuche Peanut Butter $90,000 48,000 $42,000 $89,000 79,000 $10,000 Sales Variable costs Contribution margin Fixed costs: Avoidable 9,000 5,000 $10,000 17,000 9.000 $16,000 7,000 8,000 $(5,000) Unavoidable Operating income Should any product line be eliminated/discontinued? Explain why or why not by showing your calculations and the impact on operating income. If the Peanut Butter product line is discontinued and the space formerly used to produce the Peanut Butter product line is rented out for $20,000 per year, will the overall company operating income increase or decrease? By how much? Should the Peanut Butter product line be eliminated if the space can be rented for $20,000 per year? Show all your calculations. Fudge Factory has three product lines, Chocolate, Penuche, and Peanut Butter. The following information is available: $100,000 76,000 $24,000 Chocolate Penuche Peanut Butter $90,000 48,000 $42,000 $89,000 79,000 $10,000 Sales Variable costs Contribution margin Fixed costs: Avoidable 9,000 5,000 $10,000 17,000 9.000 $16,000 7,000 8,000 $(5,000) Unavoidable Operating income Should any product line be eliminated/discontinued? Explain why or why not by showing your calculations and the impact on operating income. If the Peanut Butter product line is discontinued and the space formerly used to produce the Peanut Butter product line is rented out for $20,000 per year, will the overall company operating income increase or decrease? By how much? Should the Peanut Butter product line be eliminated if the space can be rented for $20,000 per year? Show all your calculations.

Answer rating: 100% (QA)

1 Peanut butter is a loss making division If peanut butter is elim... View the full answer