Sandford Electronics sells desktops and notebook computers. Currently, the desktop product line takes up approximately 50...

 

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Sandford Electronics sells desktops and notebook computers. Currently, the desktop product line takes up approximately 50 percent of the company's retail floor space. The president of the company is trying to decide whether the company should continue offering desktops or just concentrate on notebooks. If the desktop product line is dropped, salaries and other traceable fixed costs can be avoided. In addition, sales of notebooks will increase by 12 percent. Allocated fixed costs are assigned based on labor hours. Notebooks Desktops 800,000 $ 520,000 $ 280,000 S Total 2,000,000 1,220,000 780,000 Sales 1,200,000 $ 700,000 $ Less cost of goods sold Gross margin Less traceable fixed costs: 2$ 500,000 $ 2$ $ 140,000 S 65,000 $ Salaries 175,000 $ 60,000 $ 315,000 Other 125,000 Less allocated fixed costs: 10,667 $ 2,667 $ Rent 13,333 $ 3,333 $ 3,889 $ 24,000 Insurance $ 6,000 7,000 130,000 Cleaning & Maintenance President's salary Other Total costs Net income 3,111 $ 57,778 $ 5.333 284,556 $ (4,556) S $ 72,222 $ 6.667 $ 334,444 $ 165,556 S 12,000 619,000 161,000 2$ For each item listed below indicate the appropriate value if the Desktop line is dropped and only Notebooks are sold. Sales Cost of Goods Sold Gross margin Salaries Other Rent Insurance Cleaning President's salary Other Net income Sandford Electronics sells desktops and notebook computers. Currently, the desktop product line takes up approximately 50 percent of the company's retail floor space. The president of the company is trying to decide whether the company should continue offering desktops or just concentrate on notebooks. If the desktop product line is dropped, salaries and other traceable fixed costs can be avoided. In addition, sales of notebooks will increase by 12 percent. Allocated fixed costs are assigned based on labor hours. Notebooks Desktops 800,000 $ 520,000 $ 280,000 S Total 2,000,000 1,220,000 780,000 Sales 1,200,000 $ 700,000 $ Less cost of goods sold Gross margin Less traceable fixed costs: 2$ 500,000 $ 2$ $ 140,000 S 65,000 $ Salaries 175,000 $ 60,000 $ 315,000 Other 125,000 Less allocated fixed costs: 10,667 $ 2,667 $ Rent 13,333 $ 3,333 $ 3,889 $ 24,000 Insurance $ 6,000 7,000 130,000 Cleaning & Maintenance President's salary Other Total costs Net income 3,111 $ 57,778 $ 5.333 284,556 $ (4,556) S $ 72,222 $ 6.667 $ 334,444 $ 165,556 S 12,000 619,000 161,000 2$ For each item listed below indicate the appropriate value if the Desktop line is dropped and only Notebooks are sold. Sales Cost of Goods Sold Gross margin Salaries Other Rent Insurance Cleaning President's salary Other Net income

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Required solution Requirement A Solutions Incremental Drop in Desktop Reven... View the full answer