aya Technology manufactures electronic appliances. The company's product line income statement follows: Digital camera GoPro Total Sales revenue $300,000 $100,000 $400,000 Cost of goods sold Variable $75,000 $49,000 $124,000 Fixed $82,000 $28,000 $110,000 Total cost of goods sold $157,000 $77,000 $234,000 Gross profit $143,000 $23,000 $166,000 Marketing and administrative expenses Variable $25,000 $28,000 $53,000 Fixed $32,000 $19,000 $51,000 Total marketing and administrative expenses $57,000 $47,000 $104,000 Operating income (loss) $86,000 $(24,000) $62,000 Management is considering discontinuing the Go Pro product line. Accountants for the company estimate that discontinuing the Go Pro line will decrease fixed cost of goods sold by $10,000 and fixed marketing and administrative expenses by $4,000. Required: Prepare an analysis supporting your opinion about whether or not th
Jaya Technology manufactures electronic appliances. The company's product line income statement follows:
|
|
Digital camera |
GoPro |
Total |
|
Sales revenue |
$300,000 |
$100,000 |
$400,000 |
|
Cost of goods sold |
|
|
|
|
Variable |
$75,000 |
$49,000 |
$124,000 |
|
Fixed |
$82,000 |
$28,000 |
$110,000 |
|
Total cost of goods sold |
$157,000 |
$77,000 |
$234,000 |
|
Gross profit |
$143,000 |
$23,000 |
$166,000 |
|
Marketing and administrative expenses |
|
|
|
|
Variable |
$25,000 |
$28,000 |
$53,000 |
|
Fixed |
$32,000 |
$19,000 |
$51,000 |
|
Total marketing and administrative expenses |
$57,000 |
$47,000 |
$104,000 |
|
Operating income (loss) |
$86,000 |
$(24,000) |
$62,000 |
Management is considering discontinuing the Go Pro product line. Accountants for the company estimate that discontinuing the Go Pro line will decrease fixed cost of goods sold by $10,000 and fixed marketing and administrative expenses by $4,000.
Required:
Prepare an analysis supporting your opinion about whether or not the Go Pro product line should be discontinued.
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