Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recentperiod follows:WoodAluminumHard RubberTotal$500,000$200,000$65,00058,000$765,000523,000SalesVariable expensesContribution marginFixed expenses325,000140,000175,00060,0007,000242,00075,000132,000$110,00035,00022,000Net income (loss)$100,000$ 25,000$(15,000)Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?Select one:a. $103,000O b. $140,000c. $125,000d. $105,000

Introduction:- Calculation of total net income if the line is dropped as follows under:-

Answered: Assume none of the fixed expenses for…

Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? Select one: O a. $103,000 O b. $140,000 O c. $125,000 O d. $105,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Waterway Industries produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $520000 $210000 $65000 $795000 Variable expenses 330000 150000 58000 538000 Contribution margin 190000 60000 7000 257000 Fixed expenses 75000 35000 22000 132000 Net income (loss) $115000 $ 25000 $(15000) $125000 Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? A. $150000 B. $140000 C. $118000 D. $100000
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 $330 $1,795 Less: Variable expenses 1,115 45 264 1,424 Contribution margin $165 $140 $66 $371 Less direct fixed expenses: Depreciation 50 15 11 76 Salaries 95 85 116 296 Segment margin $20 $40 $(61) $-1 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" rather than "15".
Low-Tek Manufacturing Incorporated makes two types of industrial component parts - the B300 and the T500. The Income Statement for the most recent period is shown below: Low-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Gross profit P2,100,000 1,600,000 500,000 550,000 Selling and administrative expenses Net operating loss P(50,000) Low-Tek produced and sold 70,000 units of B300 at a price of P20 per unit and 17,500 units of T500 at a price of P40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor cost as the allocation based. Additional information relating to the company's two product lines is shown below: T500 TOTAL B300 P436,300 P251,700 P688,000 Direct materials Direct labor P200,000 P104,000 304,000 Manufacturing overhead Cost of goods sold 608,000 P1,600,000 The company has created an activity -based costing system to evaluate the profitability of its products.…
Bonita Industries produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Sales Variable expenses Contribution margin Fixed expenses Net income (loss) O $110000 O $248000 O $180000 O $270000 Save for Later esc ! Wood Q $590000 370000 220000 75000 2 Aluminum Hard Rubber $340000 $69000 180000 $145000 $ 125000 W 160000 A S 35000 #3 Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? с E 58000 D 11000 22000 $(11000) $ 4 Total R $999000 608000 391000 132000 $259000 07 dº G Search or type URL % F Attempts: 0 of 1 used Submit Answer MacBook Pro T A 6 G & Y 7 H ☆ * 00 8 U + J
Shown below is a segmented income statement for Hickory Company’s Kitchen Set product lines: Teflon Spatula Roaster TotalSales Revenue $ 400,000 $ 200,000 $ 300,000 $ 900,000Less: Variable Expenses 225,000 120,000 250,000 595,000Contribution Margin $ 175,000 $ 80,000 $ 50,000 $ 305,000Less Direct Fixed Expenses:Machine Rent (5,000) (20,000) (50,000) (75,000)Supervision (15,000) (10,000) (20,000) (45,000)Depreciation (35,000) (10,000) (25,000) (70,000)Segment Margin $ 120,000 $ 40,000 $ (45,000) $ 115,000 Refer to the information for Hickory Company above. Hickory’s management is deciding whether to keep or drop the Roaster product line. Hickory’s parquet flooring product line…
Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses: Machine rent (5,000) (20,000) (30,000) (55,000) Supervision (15,000) (10,000) (5,000) (30,000) Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (10,000) $150,000 Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000). All variable costs are relevant. Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. In addition, assume that dropping the parquet product line would reduce sales of the strip line by 27%…
Rongon Company manufactures twotypes of product. Selected information is given below:FantasyJoySelling price per unit$25$150Variable expenses per unit$15$35Number of units sold annually20,0005,000Fixed expenses total $480,800 per year. Required: i.Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the break-even point in dollars for the company as awhole and the margin of safety in both dollars and percent.ii.The company has developed a new product to be called Delight. Assume that the company could sell 10,000 units at $65each. The variable expenses would be $58each. The company’s fixed expenses would not change. a. Prepare another contribution format income statement, including sales of the Samoan Delight (sales of the other two products would not change). b. Compute the company’s new break-even point in dollars and the new margin…
The following summarized data are shown in the projected income statement of All Sports Inc. for two of its product lines – Cricket helmets and Baseball helmets: Summarized Data Name of the product lines Cricket helmets Baseball helmets Total Sales 610,000 1,100,000 1,710,000 Variable costs (520,000) (630,000) (1,150,000) Contribution margin 90,000 470,000 560,000 Fixed costs (140,000) (180,000) (320,000) Income (loss) (50,000) 290,000 240,000 Management is considering the dropping the production and sale of Cricket helmets. Assume that $30,000 of fixed costs would be saved by dropping the Cricket helmets. Further assume that dropping the Cricket helmets would not impact the sale of the Baseball helmets. What would be the effect of dropping Cricket helmets line on the operating income of the company? Group of answer choices The operating income would decrease by $60,000 The operating income would increase by $560,000 The operating income would decrease…
Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total $397,000 $212,000 $313,000 $922,000 240,000 110,000 265,000 615,000 $157,000 $102,000 $48,000 $307,000 Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Machine rent Supervision Depreciation Segment margin Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $48,000 (sales of $313,000 less total variable costs of $265,000). All variable costs are relevant. (3,000) (12,000) (47,000) (62,000) (10,500) (7,000) (3,500) (21,000) (35,000) (10,000) (25,000) (70,000) $108,500 $73,000 $(27,500) $154,000 Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. In addition, assume that dropping the parquet product line would reduce sales of the strip line by 20% and…
Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total $394,000 $201,000 $285,000 $880,000 235,000 130,000 260,000 625,000 $159,000 $71,000 $25,000 $255,000 Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Machine rent Supervision Depreciation Segment margin Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $25,000 (sales of $285,000 less total variable costs of $260,000). All variable costs are relevant. Relevant fixed costs associated with this line include 70% of parquet's machine rent and all of parquet's supervision salaries. In addition, assume that dropping the parquet product line would reduce sales of the strip line by 15% and sales of the plank line by 10%. All other information remains the same. (7,000) (28,000) (26,000) (61,000) (15,000) (10,000) (5,000) (30,000)…
Shown below is a segmented income statement for Orzo Company's three laminated flooring product lines: Line Item Description Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses: Machine rent 5,000 20,000 42,000 67,000 Supervision 15,000 10,000 20,000 45,000 Depreciation 35,000 10,000 25,000 70,000 Segment margin $120,000 $ 40,000 $ (37,000) $123,000 Orzo's management is deciding whether to keep or drop the parquet product line. Orzo's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000). All variable costs are relevant. Relevant fixed costs associated with this line include $42,000 in machine rent and $5,000 in supervision salaries. 1) Which alternative is more cost effective and by how much?____
The CVP income statements of Shalom and Peace Company are available below. The two companies belong in the same manufacturing industry and coincidentally, both had the same operating income in 2022: Sales Variable costs Contribution margin Fixed costs Operating income Shalom Peace 500,000 500,000 300,000 180,000 200,000 320,000 120,000 240,000 80,000 80,000 Amounts must be in whole numbers. Example: 88,000 or (88,000) Format of percentages: 88% Format of units: 88,000 UNITS (in whole numbers, one space after the number of units) Words must be in capital letters. Format of degree of operating leverage: 88.88X (2 decimal places with X to indicate "times") 1 Which company has a higher degree of operating leverage? 2 What is the degree of operating leverage of your answer in number 1? Use the underlined company name in capital letters as your choice. Assume that the sales will increase by 15%: 3 Using your DOL, what is the percentage of increase in Peace Company's operating income? 4 Using…