4. Yoyo, Inc. produces 3 different products with costs as follows: Sales Revenue Variable Costs Contribution Margin Avoidable Fixed Costs Unavoidable Fixed Costs Depreciation Expense Units Sold: A $8 3 5 $65,000 $20,000 $10,000 2,000 B $18 10 8 $27,500 $10,000 $ 8,000 4,000 $20 14 6 $32,000 $12,000 $ 4,000 6,000 Sales managers have been unsuccessful in increasing sales and the Company must consider which products to drop in order to maximize total operating income for the Company. Total company administrative and warehouse costs that are allocated 1/3 to each product are $30,000. The assets being depreciated cannot be sold. Determine what the company should do to maximize operating income.

4. Yoyo, Inc. produces 3 different products with costs as follows: Sales Revenue Variable Costs Contribution Margin Avoidable Fixed Costs Unavoidable Fixed Costs Depreciation Expense Units Sold: A $8 3 5 $65,000 $20,000 $10,000 2,000 B $18 10 8 $27,500 $10,000 $ 8,000 4,000 $20 14 6 $32,000 $12,000 $ 4,000 6,000 Sales managers have been unsuccessful in increasing sales and the Company must consider which products to drop in order to maximize total operating income for the Company. Total company administrative and warehouse costs that are allocated 1/3 to each product are $30,000. The assets being depreciated cannot be sold. Determine what the company should do to maximize operating income.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.16E

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