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Decision Focus: Eliminating Unprofitable Segments

Casagrande Company is currently operating at 80 percent capacity. Worried about the company's performance, Mike, the general manager, reviewed the company's operating performance. Following are sales and related cost information about Casagrande, in millions of dollars:

Required:

A. What is the current operating profit for the company as a whole? $ million

B. Assume that all fixed costs are unavoidable. If Mike eliminated the unprofitable segments, what would be the new operating profit for the company as a whole? $ million

C. What options does management have to maximize profits?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

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Item 3

D. What qualitative factors do you think management should consider before making this decision?

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Item 4

What impact could these qualitative factors have on the decision?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

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