How do I calculate the profit that would result form dropping Conway eBookKeep-or-Drop DecisionPetoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given inthousands, follows:Sales revenueLess: Variable expensesContribution marginLess direct fixed expenses:DepreciationSalariesSegment marginAlanson Boyne$1,2801,115$1655095$20$18545$1401585$40Conway Total$270203$671472$(19)$1,7351,363$37279252$41Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the productlines. None of the equipment can be sold.Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product weredropped.Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. IfConway were no longer available from Petoskey, these customers would go elsewhere to purchase Alanson. Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the productlines. None of the equipment can be sold.Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product weredropped.Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. IfConway were no longer available from Petoskey, these customers would go elsewhere to purchase Alanson.Required:Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than inthousands. For example, "15000" rather than "15".Decrease52,600 XShould Petoskey keep or drop Conway?KeepFeedbackCheck My WorkLook at contribution margin and adjust for dropping product line. Consider the sunk cost and that it is not relevant.

Fixed costs are costs that remains fixed and does not affect with the number of units produced.…

Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation Salaries Alanson Boyne Conway $1,280 $185 1,115 $165 50 95 $20 45 $140 15 85 $40 $270 203 $67 14 72 $(19) Total $1,735 1,363 $372 79 252 $41 Segment margin Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped. Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskev, these customers would go elsewhere to purchase Alanson.

Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation Salaries Alanson Boyne Conway $1,280 $185 1,115 $165 50 95 $20 45 $140 15 85 $40 $270 203 $67 14 72 $(19) Total $1,735 1,363 $372 79 252 $41 Segment margin Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped. Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskev, these customers would go elsewhere to purchase Alanson.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 16E

See similar textbooks

Similar questions

Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $360 $1,825 Less: Variable expenses 1,115 45 252 1,412 Contribution margin $165 $140 $108 $413 Less direct fixed expenses: Depreciation 50 15 13 78 Salaries 95 85 120 300 Segment margin $20 $40 $(25) $35 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000"…
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $300 $1,765 Less: Variable expenses 1,115 45 225 1,385 Contribution margin $ 165 $140 $ 75 $ 380 Less direct fixed expenses: Depreciation 50 15 10 75 Salaries 95 85 80 260 Segment margin $ 20 $ 40 $ (15) $ 45 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped. Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskey, these customers would…
A summary of HM Co's recent statement of profit or loss is given below: $'000 Revenue 10,123 Cost of sales (7,222) Gross profit 2,901 Expenses (999) Profit before interest and tax 1,902 Interest (1,000) Tax (271) Profit after interest and tax 631 70% of cost of sales and 10% of expenses are variable costs. What is HM Co's operational gearing?
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $405 $1,870 Less: Variable expenses 1,115 45 324 1,484 Contribution margin $165 $140 $81 $386 Less direct fixed expenses: Depreciation 50 15 12 77 Salaries 95 85 92 272 Segment margin $20 $40 $(23) $37 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000"…
Keep-or-Drop Decision Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement, with amounts given in thousands, follows: Line Item Description Torch Elk Walloon Total Sales revenue $1,280 $185 $315 $1,780 Less: Variable expenses 1,115 45 252 1,412 Contribution margin $165 $140 $63 $368 Less direct fixed expenses: Depreciation 50 15 10 75 Advertising 95 85 76 256 Segment margin $20 $40 $(23) $37 Direct fixed expenses consist of depreciation and advertising. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that, each of the three products has a different marketing campaign whose advertising would be eliminated if the associated product were dropped. Assume that 30% of the Torch customers choose to buy from Charlevoix because it offers a full range of products, including Walloon. If Walloon were no longer available from Charlevoix, these customers…
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $360 $1,825 Less: Variable expenses 1,115 45 288 1,448 Contribution margin $165 $140 $72 $377 Less direct fixed expenses: Depreciation 50 15 12 77 Salaries 95 85 84 264 Segment margin $20 $40 $(24) $36 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped. Required: Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example,…
Understanding CVP relationships Calculate the missing amounts for each of thefollowing firms:Units Selling Variable Costs Contribution Fixed OperatingSold Price per Unit Margin Costs Income (Loss)Firm A 11,200 $24.00 ? $100,800 $41,300 ?Firm B 8,400 ? $18.20 ? 64,500 $32,940Firm C ? 7.30 4.20 10,850 ? (6,750)Firm D 4,720 ? 51.25 41,064 48,210 ?
eBook Profit-Volume Graph For the coming year, Cabinet Inc. anticipates fixed costs of $63,450, a unit variable cost of $90, and a unit selling price of $105. The maximum sales within the relevant range are $710,640. a. Determine the maximum possible operating loss.$fill in the blank 1 b. Compute the maximum possible operating profit.$fill in the blank 2 c. Construct a profit-volume graph on paper. Indicate whether each of the following levels of sales is in the operating profit area, operating loss area, or at the break-even point. 1,000 units 2,000 units 3,000 units 4,000 units 5,000 units d. What is the break-even points in units.fill in the blank 8 units
Matamad Inc. Provides you with the following data on its operation for analysis:Unit selling priceP40Variable costs and expenses per unit.P30Fixed cost and expenses per annum.P48,000REQUIRED:a. Contribution margin per unitb. Contribution margin percentagec. BEP sales volume (units)d. BEP peso salese. Peso sales with desired income of P9,000f. Peso sales with desired income P13,000 after 32% income tax
Following information is related to Product X of Zempa Company: Current replacement cost $230 Cost to distribute $42 Historical cost Normal profit margin Selling price $215 $36 $245 If lower-of-cost-or-market rule (LCM Rule) is applied, then the value of Product X that would be reported in the balance sheet is: a.
The following information is available for Concord Company: Sales Total fixed expenses Cost of goods sold Total variable expenses $301000 $51600 103200 86000 What amount would you find on Concord's CVP income statement? General 41:18 O gross profit of $197800 • contribution margin of $163400 O contribution margin of $215000 O gross profit of $163400
Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. ( Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.)a. Assume that only one product is being sold in each of the four following case situations:Contribution Net OperatingUnits Variable Margin Fixed IncomeCase Sold Sales Expenses per Unit Expenses (Loss)1 .......... 15,000 $180,000 $120,000 ? $50,000 ?2 .......... ? $100,000 ? $10 $32,000 $8,0003 .......... 10,000 ? $70,000 $13 ? $12,0004 .......... 6,000 $300,000 ? ? $100,000 $(10,000)