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.)

MARINETTE COMPANY Income StatementCanoe Segment
Sales				$	3,900,000
Variable costs
Direct materials	$	830,000
Direct labor		880,000
Variable overhead		680,000
Variable selling and administrative		390,000
Total variable costs					2,780,000
Contribution margin					1,120,000
Fixed costs
Direct		755,000
Indirect		680,000
Total fixed costs					1,435,000
Net income				$	(315,000	)

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

	Keep the department	Eliminate the department
Sales
Expenses:
Total expenses
Net income (loss)