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Fill in the missing data for question 3 1 , ( c ) . 31. 31. Product Line Decision. The following segmented annual income statement
Fill in the missing data for question c
31. 31. Product Line Decision. The following segmented annual income statement is for Hathaway Manufacturing, Inc.: Sales Revenue Variable Costs Contribution Margin Direct Fixed Costs Allocated Fixed Costs Profit (Loss) Computers 337,500 Product Lines Furniture 2,475,000 450,000 $135,000 Supplies 450,000 $675,000 315,000 112,500 $247,500 Total 4,365,000 900,000 $30,000 Management is concerned about the significant losses associated with the computers product line and would like to drop this product line. Allocated fixed costs are assigned to product lines based on sales. If the computers product line is eliminated, total allocated fixed costs are assigned to the remaining product lines, and all variable and direct fixed costs for the computers product line will be eliminated. Required: a. b. c. Perform differential analysis using the format presented in Table 7.6, Table 7.7, and Table 7.8. Assume keeping all product lines is Alternative 1 , and dropping the computers product line is Alternative 2. Which alternative is best? Explain. Summarize the result of dropping the computer product line using the format presented in Table 7.9. Product Line Decision (continued) c. Amounts shown in parentheses indicate a negative impact on profit, and amounts without parentheses indicate a positive impact on profit: Result of Dropping Computers Product Line Sales revenue lost Description Correct Incorrect Incorrect Incorrect Incorrect Dollar Amount Correct Incorrect Incorrect Incorrect Incorrect
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