When Mr. Sylvain Laprade, president and chief executive of Laprade, Inc., first saw the segmented income...

  

Transcribed Image Text:

When Mr. Sylvain Laprade, president and chief executive of Laprade, Inc., first saw the segmented income statement below, he flew into his usual rage: "When will we ever start showing a real profit? I'm starting immediate steps to eliminate those two unprofitable lines!" Product Lines Total U $250,000 $100,000 37,500 63,000 31,000 18,000 $ 14,000 V $75,000 35,000 40,000 37,000 10,500 $(7,500) W $75,000 47,000 28,000 30,000 4,400 $(6,400) Sales Variable expenses Contribution margin 119,000 131,000 Trace able fixed expenses* 98,000 Common expenses, alloc ated32,900 $ 100 Operating income (loss) *These traceable expenses could be eliminated if the product lines to which they are traced were discontinued. Required: Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer. When Mr. Sylvain Laprade, president and chief executive of Laprade, Inc., first saw the segmented income statement below, he flew into his usual rage: "When will we ever start showing a real profit? I'm starting immediate steps to eliminate those two unprofitable lines!" Product Lines Total U $250,000 $100,000 37,500 63,000 31,000 18,000 $ 14,000 V $75,000 35,000 40,000 37,000 10,500 $(7,500) W $75,000 47,000 28,000 30,000 4,400 $(6,400) Sales Variable expenses Contribution margin 119,000 131,000 Trace able fixed expenses* 98,000 Common expenses, alloc ated32,900 $ 100 Operating income (loss) *These traceable expenses could be eliminated if the product lines to which they are traced were discontinued. Required: Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer.

Answer rating: 100% (QA)

Solution Concept For decision making Like whether to continue any busines... View the full answer