Product Line Decision. The following segmented annual income statement is for Hathaway Manufacturing, Inc.: Product Lines...

 

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Product Line Decision. The following segmented annual income statement is for Hathaway Manufacturing, Inc.: Product Lines Computers Furniture Supplies Total Sales revenue $1,125,000 $1,500,000 $ 375,000 $3,000,000 Variable costs 480,000 825,000 150,000 1,455,000 Contribution margin $ 645,000 $ 675,000 $ 225,000 $1,545,000 Direct fixed costs 650,000 480,000 105,000 1,235,000 Allocated fixed costs 112,500 150,000 37,500 300,000 Profit (loss) $(117,500) $ 45,000 $ 82,500 $ 10,000 Management is concerned about the significant losses associated with the computers product line and would like to drop this product line. Allocated fixed costs are assigned to product lines based on sales. If the computers product line is eliminated, total allocated fixed costs are assigned to the remaining product lines, and all variable and direct fixed costs for the computers product line will be eliminated. Product Line Decision a. Alternative 1 (Keep all product lines) Product Lines Computers Furniture Supplies Total $3,000,000 Sales revenue Correct Variable costs Incorrect Contribution margin Incorrect Direct fixed costs Incorrect Allocated fixed costs Incorrect Profit (loss) Incorrect Alternative 2 (Drop computers product line) Product Lines Furniture Supplies Total Sales revenue Incorrect Variable costs Incorrect Contribution margin Incorrect Direct fixed costs Incorrect Allocated fixed costs Incorrect Profit (loss) Incorrect Differential Analysis (Кееp all product lines) (Drop Computers) Alternative 1 Alternative 2 Differential Alternative 1 Differential Total Total Amount is: Amount Alternative 1 Sales revenue $1,125,000 Higher Correct Correct Variable costs Incorrect Incorrect Contribution margin Incorrect Incorrect Direct fixed costs Incorrect Incorrect Allocated fixed costs Profit (loss) Incorrect Incorrect Incorrect Use the dropdown menu to select the best answer from the options below. a. Dropping the computer line is best because profit would decrease. b. Keeping all product lines is best because profit would decrease. c. Keeping all product lines is best because profit would increase. d. Dropping the computer line is best because profit would increase. Product Line Decision. The following segmented annual income statement is for Hathaway Manufacturing, Inc.: Product Lines Computers Furniture Supplies Total Sales revenue $1,125,000 $1,500,000 $ 375,000 $3,000,000 Variable costs 480,000 825,000 150,000 1,455,000 Contribution margin $ 645,000 $ 675,000 $ 225,000 $1,545,000 Direct fixed costs 650,000 480,000 105,000 1,235,000 Allocated fixed costs 112,500 150,000 37,500 300,000 Profit (loss) $(117,500) $ 45,000 $ 82,500 $ 10,000 Management is concerned about the significant losses associated with the computers product line and would like to drop this product line. Allocated fixed costs are assigned to product lines based on sales. If the computers product line is eliminated, total allocated fixed costs are assigned to the remaining product lines, and all variable and direct fixed costs for the computers product line will be eliminated. Product Line Decision a. Alternative 1 (Keep all product lines) Product Lines Computers Furniture Supplies Total $3,000,000 Sales revenue Correct Variable costs Incorrect Contribution margin Incorrect Direct fixed costs Incorrect Allocated fixed costs Incorrect Profit (loss) Incorrect Alternative 2 (Drop computers product line) Product Lines Furniture Supplies Total Sales revenue Incorrect Variable costs Incorrect Contribution margin Incorrect Direct fixed costs Incorrect Allocated fixed costs Incorrect Profit (loss) Incorrect Differential Analysis (Кееp all product lines) (Drop Computers) Alternative 1 Alternative 2 Differential Alternative 1 Differential Total Total Amount is: Amount Alternative 1 Sales revenue $1,125,000 Higher Correct Correct Variable costs Incorrect Incorrect Contribution margin Incorrect Incorrect Direct fixed costs Incorrect Incorrect Allocated fixed costs Profit (loss) Incorrect Incorrect Incorrect Use the dropdown menu to select the best answer from the options below. a. Dropping the computer line is best because profit would decrease. b. Keeping all product lines is best because profit would decrease. c. Keeping all product lines is best because profit would increase. d. Dropping the computer line is best because profit would increase.

Answer rating: 100% (QA)

solution a alternative 1 keep all product lines computer furniture supplies total sales 1125000 1500... View the full answer