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A company has a portfolio of four products and incurs $175,000 of allocated fixed costs per year. Financial data for the four products are shown

A company has a portfolio of four products and incurs $175,000 of allocated fixed costs per year. Financial data for the four products are shown below:

Product A

Product B

Product C

Product D

Units sold 25,000 18,750 3,750 2,500
Revenue $750,000 $600,000 $150,000 $100,000
Unit variable costs 24 24 37 41

Which product should the company discontinue?

A.Product A.

B.Product B.

C.Product C.

D.Product D.

A company operates numerous vending machines in a variety of locations. The company is expanding, needs more machines, and is deciding whether to move machines from unprofitable segments to meet this need. Abbreviated income statements of the two possible unprofitable segments are shown below. The other segments, not shown, are profitable with income over $200,000.

Non-Chain Motels

Local Parks

Sales $250,000 $100,000
Cost of goods sold 130,000 50,000
Travel to service/refill machines 125,000 45,000
Allocated corporate costs 70,000 30,000
Income (loss) (75,000) (25,000)

Which segment(s) should be discontinued?

A.Non-chain motels only.

B.Local parks only.

C.Both non-chain motels and local parks.

D.Neither non-chain motels nor local parks

One approach to measuring divisional performance is return on investment (ROI). ROI is expressed as operating income

A.Divided by the current year's capital expenditures plus cost of capital.

B.Minus imputed interest charged for invested capital.

C.Divided by average fixed assets.

D.Divided by average total assets.

Explain what you learn about the disclosures of CVS Health Corporation relating to Pensions and Post Retirement Benefits.

Your comments should relate to the income statement as well as to the balance sheet treatment and disclosure in the notes to the financial statements.

Additionally consider the concept of risk and the competitive advantage of positions taken

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