Question
1.The Busbe Corporation income statement for the most recent month is given below: Total Product A Product B Sales $730,000 $410,000 $320,000 Less variable expenses
1.The Busbe Corporation income statement for the most recent month is given below:
Total Product A Product B
Sales $730,000 $410,000 $320,000
Less variable expenses 370,000 260,000 110,000
Contribution margin 360,000 150,000 210,000
Fixed costs 310,000* 160,000 150,000
Net gain (loss) $ 50,000 $(10,000) $ 60,000
*$100,000 is common costs which has been allocated to each product equally.
The company president is concerned that Product A continues to show a loss after several periods. It has been recommended that the product be dropped. What is the segment margin for Product A? Do you agree it should be dropped? (4 pts.)
1.The Busbe Corporation income statement for the most recent month is given below:
Total Product A Product B
Sales $730,000 $410,000 $320,000
Less variable expenses 370,000 260,000 110,000
Contribution margin 360,000 150,000 210,000
Fixed costs 310,000* 160,000 150,000
Net gain (loss) $ 50,000 $(10,000) $ 60,000
*$100,000 is common costs which has been allocated to each product equally.
The company president is concerned that Product A continues to show a loss after several periods. It has been recommended that the product be dropped. What is the segment margin for Product A? Do you agree it should be dropped?
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Primary English Audit And Test
Authors: Sue Reid, Angela Sawyer, Mary Bennett-Hartley
4th Edition
1446282759, 978-1446282755
