Question
DropProductLineDecision. YouworkforWandaMaximoffCorporation.Wanda wantstoknowifthefirmshould drop a product line, the Replicator. Here's information from the quarterly segment reports. Revenues $27,000 FactoryRent 3,000 ReplicatorProductionSupervisorSalary 4,100 VariableManufacturingOverhead 1,400 DepreciationofEquipment
DropProductLineDecision.
YouworkforWandaMaximoffCorporation.Wanda wantstoknowifthefirmshould drop a product line, the Replicator. Here's information from the quarterly segment reports.
Revenues | $27,000 |
FactoryRent | 3,000 |
ReplicatorProductionSupervisorSalary | 4,100 |
VariableManufacturingOverhead | 1,400 |
DepreciationofEquipment | 4,000 |
DirectLabor | 4,000 |
OfficerSalaries | 700 |
RoyaltiestoReplicatorInventor | 1,800 |
DirectMaterials | 15,000 |
ReplicatorSellingandMarketing | 900 |
NetIncome(Loss) | ( $7,900) |
Equipment has no resale value. Officer salaries are this product line's allocation of salaries for the CEO and President of the firm, Wanda Maximoff. Royalties are a percentageofReplicatorrevenues.Rentandmaintenanceareallocationsofsharedcosts: space used by the Replicator line would remain idle if the product line were dropped.
Required:ShouldWandadroptheReplicator productline?Statewhy.
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