Cinderella Inc. prepared monthly operating income for the month of April below. Additional information related to...

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Cinderella Inc. prepared monthly operating income for the month of April below. Additional information related to the month was as follows. Sales 5 Variable Costs 5 Contribution Margin Direct Fixed Expenses 3 Line Segment Margin Line A Line B Line C 100,000 $ 135,000 $ 210,000 58,000 98,000 125,000 42,000 37,000 85,000 35,000 32,000 50,000 7,000 5,000 35,000 8,000 6,000 15,000 -1,000 -1,000 20,000 Allocated Fixed Expenses 0 1 2 13 1. 68% of all direct fixed expenses are avoidable if a line is discontinued. 14 15 2. Arial allocates common fixed expenses to each line on the basis of sales dollars. Allocated fixed expenses are unavoidable. 16 3. The controller for the company estimated that discontinuing line A would result in a 15% increase in Line C sales, and discontinuing Line B would 17 result in a 10% increase in Line C sales. 18 19 4. April results are representative of what a typical month for the company's operations look like. 20 REQUIRED 21 A) Calculate the net benefit or loss of discontinuing line A. Use incremental analysis (do not use an income statement). 22 23 B) Calculate the net benefit or loss of discontinuing line B. Use incremental analysis (do not use an income statement). 24 25 C) Which line should the company discontinue? Briefly explain. 26 27 Your R Cinderella Inc. prepared monthly operating income for the month of April below. Additional information related to the month was as follows. Sales 5 Variable Costs 5 Contribution Margin Direct Fixed Expenses 3 Line Segment Margin Line A Line B Line C 100,000 $ 135,000 $ 210,000 58,000 98,000 125,000 42,000 37,000 85,000 35,000 32,000 50,000 7,000 5,000 35,000 8,000 6,000 15,000 -1,000 -1,000 20,000 Allocated Fixed Expenses 0 1 2 13 1. 68% of all direct fixed expenses are avoidable if a line is discontinued. 14 15 2. Arial allocates common fixed expenses to each line on the basis of sales dollars. Allocated fixed expenses are unavoidable. 16 3. The controller for the company estimated that discontinuing line A would result in a 15% increase in Line C sales, and discontinuing Line B would 17 result in a 10% increase in Line C sales. 18 19 4. April results are representative of what a typical month for the company's operations look like. 20 REQUIRED 21 A) Calculate the net benefit or loss of discontinuing line A. Use incremental analysis (do not use an income statement). 22 23 B) Calculate the net benefit or loss of discontinuing line B. Use incremental analysis (do not use an income statement). 24 25 C) Which line should the company discontinue? Briefly explain. 26 27 Your R