Problem 8-29 - A

Delta Aluminums management is considering eliminating product B, which has been showing a loss for several years. The companys annual income statement is as follows:

Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees.

These are the categories provided:

Total Sales $2,284,000 $1,402,000 $1,801,300 $5,487,300 Variable expenses 448,000 800,400 1,091,300 3,339,700 Contribution margin $836,000 $601,600 $710,000 $2,147,600 Advertising expense $600,000 $529,000 $522,000 $1,651,000 50,100 Depreciation expense 17,700 11,000 21,400 83,100 106,800 278,100 88,200 Corporate expenses Total fixed expenses $705,900 $623,100 $650,200 $1,979,200 $130,100 $-21,500 $59,800 $168,400 Operating income