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Asks to show all work! Keith Inc. has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected
Asks to show all work!
Keith Inc. has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes in other product lines. 40% of the fixed costs are avoidable, and the other 60% are allocated. Results of June follow: Sour Cream Ice Cream Yogurt Butter Total Units sold 2,000 500 400 200 3,100 Revenue $10,000 $20,000 $10,000 $20,000 $60,000 Variable departmental costs 6,000 13,000 4,200 4,800 28,000 Fixed costs 7,000 2,000 3,000 7,000 19,000 Net income (loss) $(3,000) $(5,000) $(2,800) $(8,200) $(13,000) Prepare an incremental analysis of the effect of dropping the Sour Cream product line. Should the Sour Cream product line be retained or eliminated, and what is the amount of incremental net income or net loss that would result from eliminating the product lineStep by Step Solution
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