Ruffa Creamery has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes in other product lines. 30% of the fixed costs are direct, and the other 70% are allocated. Results of June follow:

Transcribed Image Text:

Problem 1 Ruffa Creamery has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes in other product lines. 30% of the fixed costs are direct, and the other 70% are allocated. Results of June follow: Sour Cream Ice Cream Yogurt Butter 400 Total Units sold 2,000 500 200 3,100 $10,000 6,000 Total Revenue $20,000 $10,000 $20,000 $60,000 Variable departmental costs 13,000 4,200 4,800 28,000 Fixed costs 6,000 2,000 3,000 7,000 18,000 Net income (loss) $ (2,000) $ 5,000 $ 2,800 $ 8,200 $14,000 Required 1. Total ($) increase (decrease) in income if the Sour Cream product line is discontinued. Problem 1 Ruffa Creamery has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes in other product lines. 30% of the fixed costs are direct, and the other 70% are allocated. Results of June follow: Sour Cream Ice Cream Yogurt Butter 400 Total Units sold 2,000 500 200 3,100 $10,000 6,000 Total Revenue $20,000 $10,000 $20,000 $60,000 Variable departmental costs 13,000 4,200 4,800 28,000 Fixed costs 6,000 2,000 3,000 7,000 18,000 Net income (loss) $ (2,000) $ 5,000 $ 2,800 $ 8,200 $14,000 Required 1. Total ($) increase (decrease) in income if the Sour Cream product line is discontinued.