Snorkel Mom is a company that sells and rents snorkeling gear and boogie boards. Assume below is
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Snorkel Mom is a company that sells and rents snorkeling gear and boogie boards. Assume below is the income statement from last year for the boogie board business segment:
Sales | $2,300,000 |
Variable expenses | $1,500,000 |
Contribution margin | $800,000 |
Fixed expenses | $950,000 |
If the boogie board segment was discontinued, Snorkel Mom could avoid $400,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. What would be The annual financial advantage (disadvantage) for the company discontinuing the the boogie board segment ?
Related Book For
International Financial Statement Analysis CFA Institute Investment Series
ISBN: 9780470287668
1st Edition
Authors: Thomas R. Robinson, Hennie Van Greuning CFA, Elaine Henry, Michael A. Broihahn, Sir David Tweedie
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