Exercise 23-13 Income analysis of eliminating Departments LO A1

Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is available regarding its canoe segment. (Leave no cells blank. Enter zeros where appropriate.)

2. Should management discontinue the manufacturing of canoes? Yes No

MARINETTE COMPANY Income StatementCanoe Segment
Sales				$	2,900,000
Variable costs
Direct materials	$	630,000
Direct labor		680,000
Variable overhead		480,000
Variable selling and administrative		290,000
Total variable costs					2,080,000
Contribution margin					820,000
Fixed costs
Direct		555,000
Indirect		480,000
Total fixed costs					1,035,000
Net income				$	(215,000	)

. If canoes are discontinued, calculate the net income lost or gained.

There is only option for : DM, DL, V OH, VARIABLE SELLING , DIRECT FIXED COST AND INDIRECT FIXED COST