Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas;...
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Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Green Beans $ 83,000 57,800 $ 25,200 10,380 $ 14,820 Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Sweet Peas $ 111,500 102,400 $ 9,100 14,340 $ (5,240) Tomatoes $ 131,200 107,300 $ 23,900 18,360 $ 5,540 Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Green Beans $ 83,000 57,800 $ 25,200 10,380 $ 14,820 Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line? Sweet Peas $ 111,500 102,400 $ 9,100 14,340 $ (5,240) Tomatoes $ 131,200 107,300 $ 23,900 18,360 $ 5,540
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Solution a Differential Cost Schedule Product Line Revenue Variable Costs Contribution Margin Fixed ... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
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