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 $315 $1,780 Less: Variable expenses 1,115 45 221 1,381 Contribution margin $165 $140 $94 $399 Less direct fixed expenses: Depreciation 50 15 11 76 Salaries 95 85 112 292 Segment margin $20 $40 $(29) $31 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 Convway. If Conway 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 in thousands. For example, "15000" rather than "15". Should Petoskey keep or drop Convay?

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 $315 $1,780 Less: Variable expenses 1,115 45 221 1,381 Contribution margin $165 $140 $94 $399 Less direct fixed expenses: Depreciation 50 15 11 76 Salaries 95 85 112 292 Segment margin $20 $40 $(29) $31 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 Convway. If Conway 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 in thousands. For example, "15000" rather than "15". Should Petoskey keep or drop Convay?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 45E

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 $285 $1,750 Less: Variable expenses 1,115 45 200 1,360 Contribution margin $165 $140 $85 $390 Less direct fixed expenses: Depreciation 50 15 9 74 Salaries 95 85 112 292 Segment margin $20 $40 $(36) $24 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…
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,…
Biblio Files CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8 Sales $379,000 Variable costs: Manufacturing expense $151,600 Selling expense 15,160 Administrative expense 60,640 (227,400) Contribution margin $151,600 Fixed costs: Manufacturing expense $76,750 Selling expense 8,000 Administrative expense 10,000 (94,750) Operating income $56,850 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type ofBookshelf Sales Priceper Unit Variable Costper Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called…
Biblio Files CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8 Sales $379,000 Variable costs: Manufacturing expense $151,600 Selling expense 15,160 Administrative expense 60,640 (227,400) Contribution margin $151,600 Fixed costs: Manufacturing expense $76,750 Selling expense 8,000 Administrative expense 10,000 (94,750) Operating income $56,850 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type ofBookshelf Sales Priceper Unit Variable Costper Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called…
Accounting Gosnell Company produces two products: squares and circles. The projected income for thecoming year, segmented by product line, follows:Squares Circles TotalSales P300,000 P2,500,000 P2,800,000Less: Variable expenses 100,000 500,000 600,000Contribution margin P200,000 P2,000,000 P2,200,000Less: Direct fixed expenses 28,000 1,500,000 1,528,000Product margin P172,000 P 500,000 P 672,000Less: Common fixedexpenses100,000Operating expenses P 572,000The selling prices are P30 for squares and P50 for circles.1. Compute the number of units of each product that must be sold for Gosnell Companyto break even.2. Assume that the marketing manager changes the sales mix of the two products sothat the ratio is three squares to five circles. Repeat Requirement 13. Refer to the original data. Suppose that Gosnell can increase the sales of squares withincreased advertising. The extra advertising would cost an additional P45,000, andsome of the potential purchasers of circles would switch to…
avapei Company produces three products: A, B, and C. A segmented income statement, with amounts given in thousands, follows: Direct fixed expenses include depreciation on equipment dedicated to the product lines of $20,000 for A, $120,000 for B, and $25,000 for C. None of the product line equipment can be sold, and would have to be disposed of if the product line were dropped. Required What impact on profit would result from dropping Product C? Suppose that 10 percent of the customers for Product B choose to buy from Yavapei because it offers a full range of products, including Product C. If C were no longer available from Yavapei, these customers would go elsewhere to purchase B. Now what is the impact on profit if Product C is dropped?
Sunland, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Bud Wise Er Total Units sold 7,800 13,000 5,200 26,000 Revenue $182,000 $130,000 $104,000 $416,000 Less variable costs 83,200 67,600 41,600 192,400 Less direct fixed costs 36,400 49,400 31,200 117,000 Less allocated fixed costs 15,600 26,000 10,400 52,000 Net income $46,800 $(13,000) $20,800 $54,600 All of the allocated costs will continue even if a division is discontinued. Sunland allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Sunland is concerned that it should be discontinued. Sunland thinks that if the division is closed, that sales at the Bud division will increase by 12% while sales at the Er division will stay the same. (a)…
(J) disclosed the following information for November: Sales: $ 408,000Contribution margin: $ 108,800Net operating incone : $ 20,900 The company's margin of safety as a peroentage of its sales is closest to: (Do not round intermediate calculations.)Multiple choice 12.85% 24.46% 29.02% 19.21%
The follooving information relates to Snorbird Corporation Sales at the breakeven point P312.500 lotal foed expenses 250,000 et opetating income 150,000 what is Sncwbird s margin of safety