Harmark has three product lines in its retail stores: kites, wind socks, and flags. Results of the fourth quarter are presented below: Units sold Revenue Variable departmental costs Direct fixed costs Allocated fixed costs Net income (loss) Kites 1,000 $22,000 15,000 1,000 8,000 S (2.000) Wind Socks 2,000 $40,000 22,000 3,000 8.000 $ 7.000 Flags 2,000 $23,000 12,000 2,000 8,000 $ 1,000 Total 5,000 $85,000 49,000 6,000 28.000 $ 6.000

Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
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What will happen to profits if Harmark discontinues the Kites product line? The profits will drop by _______.

Harmark has three product lines in its retail stores: kites, wind socks, and flags. Results of the fourth
quarter are presented below:
Kites
1,000
$22,000
15,000
1,000
8,000
S (2,000)
Wind Socks
2,000
$40,000
22,000
3,000
8,000
$ 7.000
Flags
2,000
$23,000
12,000
2,000
8,000
$ 1.000
Total
5.000
$85,000
49,000
6,000
28.000
$ 6.000
Units sold
Revenue
Variable departmental costs
Direct fixed costs
Allocated fixed costs
Net income (loss)
The allocated fixed costs are unavoidable. Demand of individual products is not affected by changes in
other product lines.
Transcribed Image Text:Harmark has three product lines in its retail stores: kites, wind socks, and flags. Results of the fourth quarter are presented below: Kites 1,000 $22,000 15,000 1,000 8,000 S (2,000) Wind Socks 2,000 $40,000 22,000 3,000 8,000 $ 7.000 Flags 2,000 $23,000 12,000 2,000 8,000 $ 1.000 Total 5.000 $85,000 49,000 6,000 28.000 $ 6.000 Units sold Revenue Variable departmental costs Direct fixed costs Allocated fixed costs Net income (loss) The allocated fixed costs are unavoidable. Demand of individual products is not affected by changes in other product lines.
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