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fill in the missing data for question 3 1 ( a ) . 31. 31. Product Line Decision. The following segmented annual income statement is
fill in the missing data for question a
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. Perform differential analysis using the format presented in and Table 7.6, Table 7.7, Table 7.8. Assume keeping all product lines is Alternative 1 , and dropping the computers product line is Alternative 2. Product Line Decision a. Alternative 1 (Keep all product lines) Com uters Sales revenue Product Lines Furniture Variable costs Contribution margin Direct fixed costs Allocated fixed costs Profit (loss) Alternative 2 (Drop computers product line) Product Lines Furniture Sales revenue Variable costs Contribution margin Direct fixed costs Allocated fixed costs Profit (loss) Differential Analysis (Keep all product lines) Alternative 1 Total Sales revenue Variable costs Contribution margin Direct fixed costs Allocated fixed costs Profit (loss) Supplies (Drop Computers) Alternative 2 Total Supplies Total Differential Amount $3,375,000 Total Alternative 1 is: Higher Correct Incorrect Incorrect Incorrect Incorrect Incorrect Incorrect Incorrect Incorrect Incorrect Incorrect Incorrect Differential Amount Correct Incorrect Incorrect Incorrect Incorrect Alternative 1 Correct Incorrect Incorrect Incorrect Incorrect
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