7th: T Company has two product lines that it sells at its store. Performance Evaluation figures are as follows: Sales Variable Costs Contribution Margin Fixed Costs (since there are two products, and each takes up half of the store, management divides the total amount evenly between them) Profit Stove Model #1 $300,000 200,000 $100,000 120,000 Stove Model #2 $750,000 450,000 $300,000 120,000 (NOTE: total profit = $160,000) ($20,000) Should Stove Model #1 be discontinued? Why or why not? (If management discontinues Stove Model #1, what would the total profit generated by the store be?) $180,000
7th: T Company has two product lines that it sells at its store. Performance Evaluation figures are as follows: Sales Variable Costs Contribution Margin Fixed Costs (since there are two products, and each takes up half of the store, management divides the total amount evenly between them) Profit Stove Model #1 $300,000 200,000 $100,000 120,000 Stove Model #2 $750,000 450,000 $300,000 120,000 (NOTE: total profit = $160,000) ($20,000) Should Stove Model #1 be discontinued? Why or why not? (If management discontinues Stove Model #1, what would the total profit generated by the store be?) $180,000
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5BE
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