Acme Company has two product lines, Product X and Product Z. Here are data for the current year: Product Z $550,000 357,000 $193,000 (55,000) $138,000 Sales revenue Variable costs Contribution margin Traceable fixed costs Segment margin O $239.000 O $294.000 $331,000 $349,000 Total $1,000,000 Acme's common fixed costs are $90,000 and its operating income is $85,000. Acme plans to discontinue the production of Product X and use the freed-up capacity to triple the production and sale of Product Z. Although this will eliminate the traceable fixed costs for Product X, the traceable fixed costs for Product Z will double. How much will operating income increase if Acme discontinues the production and sale Product X? haun 745,000 $255,000 (80,000) $175,000 Product X $450,000 388,000 $62,000 (25,000) $37,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Please do not give solution in image format thanku 

Acme Company has two product lines, Product X and Product Z. Here are data for the current year:
Product X
Product Z
Sales revenue
Variable costs
Contribution margin
Traceable fixed costs
Segment margin
O $239.000
Total
$1,000,000
745,000
$255,000
(80,000)
$175,000
O $294.000
O $331,000
$349,000
None of the above
$450,000
388,000
$62,000
(25,000)
$37,000
Acme's common fixed costs are $90,000 and its operating income is $85,000. Acme plans to
discontinue the production of Product X and use the freed-up capacity to triple the production and
sale of Product Z. Although this will eliminate the traceable fixed costs for Product X, the traceable
fixed costs for Product Z will double. How much will operating income increase if Acme discontinues
the production and sale Product X?
$550,000
357,000
$193,000
(55,000)
$138,000
Transcribed Image Text:Acme Company has two product lines, Product X and Product Z. Here are data for the current year: Product X Product Z Sales revenue Variable costs Contribution margin Traceable fixed costs Segment margin O $239.000 Total $1,000,000 745,000 $255,000 (80,000) $175,000 O $294.000 O $331,000 $349,000 None of the above $450,000 388,000 $62,000 (25,000) $37,000 Acme's common fixed costs are $90,000 and its operating income is $85,000. Acme plans to discontinue the production of Product X and use the freed-up capacity to triple the production and sale of Product Z. Although this will eliminate the traceable fixed costs for Product X, the traceable fixed costs for Product Z will double. How much will operating income increase if Acme discontinues the production and sale Product X? $550,000 357,000 $193,000 (55,000) $138,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Accounting for Business Combinations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education