Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ASAP please lago Company sells two items: Jelly Beans and Licorice. The company is considering dropping Jelly Beans. It is expected that sales of Licorice
ASAP please
lago Company sells two items: Jelly Beans and Licorice. The company is considering dropping Jelly Beans. It is expected that sales of Licorice will increase by 30% as a result. Dropping Jelly Beans will allow the company to cancel its monthly rental of its sugar shucker costing $60 a month. The other existing equipment will be used for additional production of peanuts. The company's other fixed costs are allocated and will continue regardless of the decision made. A condensed, budgeted monthly income statement with both products is below: Total Jelly Beans Licorice Sales $40,000 $10,000 $30,000 Food materials 14,000 4,000 10,000 Direct labour 12,000 3,000 9,000 Equipment rental 1,600 700 900 Other allocated overhead 2,950 2.000 950 Operating income $.9.450 $ 300 $ 9.150 Prepare an incremental analysis to determine the financial effect of dropping soybean productions. HINT-be clear which of the costs are variable, fixed or mixed. If the company discontinues the Jelly Bean line: What are the revenues for the Licorice line? $ What are the company's food material costs? $ What are the company's direct labour costs? $ What are the equipment rental costs? $ What are the allocated overhead costs? $ Should the company discontinue the Jelly Bean line? What is the incremental difference if they go ahead with dropping the Jelly Bean line? $ 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