Ranger Company makes and sells three different products with the following sales results last year: Sales...
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Ranger Company makes and sells three different products with the following sales results last year: Sales Product A $560,400 Manufacturing Costs: Variable Fixed Fixed Total Costs Net Income 252,180 56,800 Selling and administrative expenses: Variable Product B $316,800 33,600 21,200 363,780 $196,620 221,760 20,700 19,000 17,400 278,860 $37,940 Product C $165,600 91,080 61,200 24,800 11,000 188,080 -$22,480 Total $1,042,800 $565,020 $138,700 $77,400 $49,600 830,720 $212,080 In view of the net loss for Product C, Ranger's management is considering dropping that product. All variable costs are direct costs and would be eliminated if Product C were dropped. Fixed costs are indirect costs and no fixed costs would be eliminated with Product C. Assume the space used to produce Product C would be used by the other product lines or would be left idle. Required: Would you recommend the elimination of Product C? Why or why not? Provide all supporting calculations. Ranger Company makes and sells three different products with the following sales results last year: Sales Product A $560,400 Manufacturing Costs: Variable Fixed Fixed Total Costs Net Income 252,180 56,800 Selling and administrative expenses: Variable Product B $316,800 33,600 21,200 363,780 $196,620 221,760 20,700 19,000 17,400 278,860 $37,940 Product C $165,600 91,080 61,200 24,800 11,000 188,080 -$22,480 Total $1,042,800 $565,020 $138,700 $77,400 $49,600 830,720 $212,080 In view of the net loss for Product C, Ranger's management is considering dropping that product. All variable costs are direct costs and would be eliminated if Product C were dropped. Fixed costs are indirect costs and no fixed costs would be eliminated with Product C. Assume the space used to produce Product C would be used by the other product lines or would be left idle. Required: Would you recommend the elimination of Product C? Why or why not? Provide all supporting calculations.
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Answer rating: 100% (QA)
To determine whether Product C should be eliminated we need to analyze its contribution to the overa... View the full answer
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
Posted Date:
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