4-65 (Static) Decision Whether to Add or Drop (LO 4-4) O'Neil Enterprises produces a line of canned soups for sale at supermarkets across the country. Demand has been "soft" recently and the company is operating at 70 percent of capacity. The company is considering dropping one of the soups, beef barley, in hopes of improving profitability. If beef barley is dropped, the revenue associated with it will be lost and the related variable costs saved. The CFO estimates that the fixed costs will also be reduced by 25 percent. The following product line statements are available. Product Sales Variable costs Broth $32,600 22,000 Beef Barley $42,800 38,600 Minestrone $ 51,200 40,100 Contribution margin Fixed costs allocated to each product line Operating profit (loss) $10,600 4,700 $ 4,200 $ 11,100 6,000 7,100 $ 5,900 $ (1,800) $ 4,000 Required: a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil drop the beef barley line? b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? The following product line statements are available. Product Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Broth $32,600 22,000 $10,600 Beef Barley $42,800 Minestrone 38,600 $ 51,200 40,100 $ 4,200 $ 11,100 4,700 6,000 7,100 $ 5,900 $ (1,800) $ 4,000 Required: a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil drop the beef barley line? b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Complete the following differential cost schedule. Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Status Quo Alternative: Drop Beef Barley Difference Req A1 Req A2 > The following product line statements are available. Product Sales Variable costs Broth $32,600 22,000 $10,600 4,700 Beef Barley $42,800 38,600 Minestrone $ 51,200 40,100 $ 4,200 6,000 $ 11,100 7,100 Contribution margin Fixed costs allocated to each product line Operating profit (loss) $ 5,900 $ (1,800) $ 4,000 Required: a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil drop the beef barley line? b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 From an operating profit perspective, should O'Neil drop the beef barley line? Yes O No < Req A1 Req B1 > Required: a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil drop the beef barley line? b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. B1. Complete the following differential cost schedule. Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Status Quo Alternative: Drop Beef Barley Difference (all lower under the alternative) < Req A2 Req B2 > Show less Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Rleq B2 When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. B2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Yes No < Req B1 Req B2 > Show less