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Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as
Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows: A B C Total Sales $2,285,000 $1,410,000 $1,802,100 $5,497,100 Variable expenses 1,683,000 601,100 1,088,000 3,372,100 Contribution margin $602,000 $808,900 $714,100 $2,125,000 Advertising expense $517,000 $428,000 $522,000 $1,467,000 Depreciation expense 15,900 10,800 20,100 46,800 Corporate expenses 92,300 80,000 105,600 277,900 Total fixed expenses $625,200 $518,800 $647,700 $1,791,700 Operating income $(23,200) $290,100 $66,400 $333,300 Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees.
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