Party Supply is trying to decide if they should continue its costume segment. The information shown is available for Party Supply’s business segments. Assume that neither the Direct Fixed Costs nor the Allocated Common Fixed Costs may be eliminated, but will be allocated to the two remaining segments. Costumes Party Supplies Floral Decorations Sales $160,000 $110,000 $210,000 Variable Costs 84,000 50,000 120,000 Contribution Margin 76,000 60,000 90,000 Direct Fixed Costs 50,000 20,000 25,000 Allocated Common Fixed Costs 30,000 25,000 30,000 Net Income (Loss) (4,000) 15,000 35,000 If costumes are dropped, what change will occur to profit?
Party Supply is trying to decide if they should continue its costume segment. The information shown is available for Party Supply’s business segments. Assume that neither the Direct Fixed Costs nor the Allocated Common Fixed Costs may be eliminated, but will be allocated to the two remaining segments. Costumes Party Supplies Floral Decorations Sales $160,000 $110,000 $210,000 Variable Costs 84,000 50,000 120,000 Contribution Margin 76,000 60,000 90,000 Direct Fixed Costs 50,000 20,000 25,000 Allocated Common Fixed Costs 30,000 25,000 30,000 Net Income (Loss) (4,000) 15,000 35,000 If costumes are dropped, what change will occur to profit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- Party Supply is trying to decide if they should continue its costume segment. The information shown is available for Party Supply’s business segments. Assume that neither the Direct Fixed Costs nor the Allocated Common Fixed Costs may be eliminated, but will be allocated to the two remaining segments.
|
|
Costumes |
Party Supplies |
Floral Decorations |
|
Sales |
$160,000 |
$110,000 |
$210,000 |
|
Variable Costs |
84,000 |
50,000 |
120,000 |
|
Contribution Margin |
76,000 |
60,000 |
90,000 |
|
Direct Fixed Costs |
50,000 |
20,000 |
25,000 |
|
Allocated Common Fixed Costs |
30,000 |
25,000 |
30,000 |
|
Net Income (Loss) |
(4,000) |
15,000 |
35,000 |
- If costumes are dropped, what change will occur to profit?
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