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23. Product Line Decision. The following segmented annual income statement is for Storage Devices, Inc.: Product Lines 1 Gig 2 Gig 4 Gig Total
23. Product Line Decision. The following segmented annual income statement is for Storage Devices, Inc.: Product Lines 1 Gig 2 Gig 4 Gig Total Sales revenue Variable costs $1,000,000 $4,000,000 $5,000,000 600,000 Contribution margin Direct fixed costs $400,000 300,000 2,500,000 $1,500,000 3,500,000 $10,000,000 6,600,000 $1,500,000 $ 3,400,000 Allocated fixed costs Profit (loss) (A) 800,000 (B) 1,000,000 (C) 2,100,000 1,100,000 $ (D) $ (E) $ (F) $ 200,000 For items A, B, and C in the chart above, assign allocated fixed costs to each product line based on sales revenue for each product line as a proportion of total sales revenue. For example, the 1 Gig product will be assigned 10 percent of allocated fixed costs (= $1,000,000 in 1 Gig sales revenue $10,000,000 total sales revenue), or $110,000 (=$1,100,000 total allocated fixed costs x 10 percent). For items D, E, and F in the chart above, calculate the profit or loss for each product line.
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