Answered step by step
Verified Expert Solution
Question
1 Approved Answer
33. Product Line Decision. The following monthly segmented income statement is for Hal's Hardware. Product Lines Garden Supplies Tools Paint Total Sales revenue $20,000 $15,000
33. Product Line Decision. The following monthly segmented income statement is for Hal's Hardware. Product Lines Garden Supplies Tools Paint Total Sales revenue $20,000 $15,000 $23,000 $58,000 Variable costs 11,000 8,000 9,000 28,000 Contribution margin $ 9,000 $ 7,000 $14,000 $30,000 Direct fixed costs 3,000 1,500 8,500 13,000 Allocated fixed costs 2,000 5,000 3,000 10,000 Profit $ 4,000 $ 500 $ 2,500 $ 7,000 Management is concerned about the low profit associated with the tools product line and is considering dropping this product line. Allocated fixed costs are assigned to product lines based on floor space used by each product line (measured in square feet), resulting in the following percentages for garden supplies, tools, and paint, respectively: 20 percent, 50 percent, and 30 percent. If the tools product line is eliminated, total allocated fixed costs will be assigned as follows: 62.5 percent to garden supplies, and 37.5 percent to paint. All variable and direct fixed costs for the tools product line will be eliminated
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started