Question
Austin Appliances is concerned about the losses associated with the blenders product line and is considering dropping this product line. Allocated fixed costs are assigned
Austin Appliances is concerned about the losses associated with the blenders product line and is considering dropping this product line. Allocated fixed costs are assigned to product lines based on sales. If Austin Appliances eliminates a product line, total allocated fixed costs are assigned to the remaining product lines. All variable costs and direct fixed costs are differential costs.
Blenders: sales $75,473, vairable costs $32,179, direct fixed costs $39,065, allocated fixed costs $5,660
Coffee Makers: sales $103,338, vairable costs $55,844, direct fixed costs $32,111, allocated fixed costs $7,597
Toasters: sales $25000, vairable costs $10000, direct fixed costs $7000, allocated fixed costs $1875
Using the differential analysis determine the increase/decrease in profit if Austin Appliances drops the blenders product line versus keeps the product 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