A value-driven car manufacturer, Concord, started its business more than 50 years ago, making and selling a sedan body style. Sedans were popular at the time, and this one drove the success of Concord for years due to its practical yet stylish nature. As times changed, Concord designed models in different body styles, and those models have outpaced sedans, as follows. Sales Variable costs Contribution margin Fixed costs Operating income (loss) (a) Sedan $1,201,000 693,000 508,000 812,800 eTextbook and Media Your answer is correct. SUV Concord would be better off $4,209,000 1,992,000 $(304,800) $1,312,000 2,217,000 by $ 905,000 Truck $3,888,000 1,804,000 2,084,000 1,205,000 $879,000 The income statements above reflect the second consecutive year the sedan category has lost money. Concord is concerned about dropping this vehicle, however, since the company's success was originally built on it. Van $2,015,000 1,092,000 101,600 923,000 Concord believes it can save $609,600 in fixed costs associated with the sedans if it drops that vehicle category. Should the company seriously consider dropping it? How much better or worse off, financially, would it be by dropping the sedan? 803,000 $120,000 Attempts: 1 of 3 used Your answer is correct. Assume that 75% of the fixed costs shown in the original information, for all product lines, are direct fixed costs. The remaining fixed costs are common fixed costs, allocated to the product lines according to their sales volumes. Recast the product-line income statements detailing the direct and allocated fixed costs for each, including a subtotal for segment margin and an overall total column. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sales Less: Variable costs Contribution margin Less: Direct fixed costs Segment margin Less: Allocated fixed costs Operating income eTextbook and Media $ $ $ $ Sedan 1,201,000 693,000 i 508,000 609,600 i -101,600 203200 i -304800 $ $ $ $ SUV 4,209,000 1,992,000 i 2,217,000 678,750 i 1,538,250 226250 i 1312000 $ $ $ $ Truck 3,888,000 1,804,000 i 2,084,000 903,750 i 1,180,250 301250 i 879000 Attempts: 2 of 3 used Assume that 75% of the fixed costs shown in the original information, for all product lines, are direct fixed costs. The remaining fixed costs are common fixed costs, allocated to the product lines according to their sales volumes. Recast the product-line income statements detailing the direct and allocated fixed costs for each, including a subtotal for segment margin and an overall total column. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) SUV 4,209,000 1,992,000 i 2,217,000 678,750 i 1,538,250 226250 i 1312000 eTextbook and Media $ $ $ $ Truck 3,888,000 1,804,000 2,084,000 903,750 1,180,250 301250 879000 $ $ $ $ Van 2,015,000 1,092,000 923,000 602,250 320,750 200750 i 120000 $ $ $ $ Total 11,313,000 5,581,000 5,732,000 2,794,350 i 2,937,650 931,450 i 2,006,200 Attempts: 2 of 3 used - Your answer is partially correct. (d1) Based on your analysis for part (c), what will happen to the allocated costs if Concord drops the sedans? Recast product-line income statements, including a subtotal for segment margin and an overall total column, if Concord drops the sedan line. (Round proportions to 4 decimal places, e.g. 0.2513 and final answers to 2 decimal places, e.g. 5,125.76.) Allocated fixed costs $ Operating income $ SUV None eTextbook and Media 387705.01 SUV $ 1150544.99 (d2) What happens to overall operating income? (Round proportions to 4 decimal places, e.g. 0.2513 and final answers to 2 decimal places, e.g. 5,125.76.) (d3) Are any of the other vehicle lines now in jeopardy of losing money? Truck Truck 358136.63 822113.37 $ $ Van 185608.36 Van 135141.64 Assistance Used