Problem 8-55 Segmented Income Statements, Product-Line Analysis: Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled 340,000, of which 184,000 can be avoided if the blenders are not produced and 142,500 can be avoided if the coffee makers are not produced. Revenue and variable cost information follows: Blenders Coffee Makers Selling price per applinace: $24 $29 Variable expenses per appliance: 18 27ANSWER THE FOLLIWING QUESTIONS USING THE TEMPLATES PROVIDED! Problem 8-551. Prepare a segmented Income Statement and separate direct and common fixed costs.BlendersCoffe MakersTotalSalesLess: Variable cost of goods soldContribution marginLess: Direct fixed expensesSegment marginLess: Common fixed expenses213,500Operating income2. What is the effect on Alard's profit if the coffee maker line is dropped? If the blender line is dropped?Drop blender line:Drop the coffee maker line:3. What is the effect on firm PROFITS if an additional 10,000 blenders could be produced (using existing capacity) and soldfor $21.50 on a special-order basis? Assume existing sales would not be affected by the speical order.Answer:

1.Prepare a segmented income statement and separate the direct and common fixed costs.

Answered: Problem 8-55 1. Prepare a segmented…

Managerial Accounting: The Cornerstone of Business Decision-Making

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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

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Problem 8-55 Segmented Income Statements, Product-Line Analysis:

Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled 340,000, of which 184,000 can be avoided if the blenders are not produced and 142,500 can be avoided if the coffee makers are not produced. Revenue and variable cost information follows:

Blenders Coffee Makers

Selling price per applinace: $24 $29

Variable expenses per appliance: 18 27

ANSWER THE FOLLIWING QUESTIONS USING THE TEMPLATES PROVIDED!

Problem 8-55
1. Prepare a segmented Income Statement and separate direct and common fixed costs.
Blenders
Coffe Makers
Total
Sales
Less: Variable cost of goods sold
Contribution margin
Less: Direct fixed expenses
Segment margin
Less: Common fixed expenses
213,500
Operating income
2. What is the effect on Alard's profit if the coffee maker line is dropped? If the blender line is dropped?
Drop blender line:
Drop the coffee maker line:
3. What is the effect on firm PROFITS if an additional 10,000 blenders could be produced (using existing capacity) and sold
for $21.50 on a special-order basis? Assume existing sales would not be affected by the speical order.
Answer:

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