Question
FREEBIRD, INC. Contribution Margin by Size Segment For the Year Ended January 31, 2013 Size S M L Total Revenue $ 1,320,000 $ 1,450,000 $
FREEBIRD, INC. | |||||||||||
Contribution Margin by Size Segment | |||||||||||
For the Year Ended January 31, 2013 | |||||||||||
Size | |||||||||||
S | M | L | Total | ||||||||
Revenue | $ 1,320,000 | $ 1,450,000 | $ 1,260,000 | $ 4,030,000 | |||||||
Variable cost of goods sold | 718,000 | 958,000 | 756,000 | 2,432,000 | |||||||
Manufacturing margin | X | X | X | X | |||||||
Variable operating expenses | X | X | X | X | |||||||
Contribution margin | X | X | X | X | |||||||
Fixed costs: | X | ||||||||||
Manufacturing costs | X | ||||||||||
Operating expenses | X | ||||||||||
Total fixed costs | X | ||||||||||
Income from operations | X | ||||||||||
If proposal 2 is accepted: | |||||||||||
Contribution margin for Size M | X | ||||||||||
Less: Reduction in fixed production costs | X | ||||||||||
Reduction in fixed operating expenses | X | ||||||||||
Reduction in annual income from operations | X | ||||||||||
FREEBIRD, INC. | |||||||||||
Contribution MarginProposal 3 | |||||||||||
Size | |||||||||||
S | L | Total | |||||||||
Revenue | X | X | X | ||||||||
Variable cost of goods sold | X | X | X | ||||||||
Manufacturing margin | X | X | X | ||||||||
Variable operating expenses | X | X | X | ||||||||
Contribution margin | X | X | X | ||||||||
Fixed costs: | X | ||||||||||
Manufacturing costs | X | ||||||||||
Operating expenses (including additional rent) | X | ||||||||||
Total fixed costs | X | ||||||||||
Income from operations | |||||||||||
If proposal 3 is accepted: | |||||||||||
Income from operations, Proposal 3 | X | ||||||||||
Income from operations, present conditions (part 1) | X | ||||||||||
Increase in income from operations | X | ||||||||||
The screenshot has the numbers that were given while the empty boxes with X's are the ones that need to be solved, can you please explain the math to solve the empty X boxs thank you
Freebird, Inc., manufactures three sizes of industrial work benchessmall (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (1) continue Size M, (2) discontinue Size M and reduce total output accordingly, or (3) discontinue Size M and conduct an advertising campaign to expand the sales of Size S so that the entire plant capacity can continue to be used. If Proposal 2 is selected and Size M is discontinued and production curtailed, the an- nual fixed production costs and fixed operating expenses could be reduced by $190,000 and $37,800, respectively. If Proposal 3 is selected, it is anticipated that an additional annual expenditure of $113,400 for the salary of an assistant brand manager (classified as a fixed operating expense) would yield an increase of 130% in Size S sales volume. It is also assumed that the increased production of Size S would utilize the plant facilities released by the discontinuance of Size M. The sales and costs have been relatively stable over the past few years, and they are expected to remain so for the foreseeable future. The income statement for the past year ended January 31, 2013, is as follows: Size S M L $1,260,000 Total $4,030,000 $1,320,000 $1,450,000 Sales Cost of goods sold: Variable costs. Fixed costs Total cost of goods sold Gross profit Less operating expenses: Variable expenses Fixed expenses Total operating expenses Income from operations. $ 718,000 321,300 $1,039,300 $ 280,700 $ 958,000 384,000 $1,342,000 $ 108,000 $ 756,000 334,000 $1,090,000 $ 170,000 $2,432,000 1,039,300 $3,471,300 $ 558,700 $ 157,500 42,840 $ 200,340 $ 80,360 $ 145,000 56,700 $ 201,700 $ (93,700) $ 113,400 19,000 $ 132,400 $ 37,600 $ 415,900 118,540 $ 534,440 $ 24,260 Freebird, Inc., manufactures three sizes of industrial work benchessmall (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (1) continue Size M, (2) discontinue Size M and reduce total output accordingly, or (3) discontinue Size M and conduct an advertising campaign to expand the sales of Size S so that the entire plant capacity can continue to be used. If Proposal 2 is selected and Size M is discontinued and production curtailed, the an- nual fixed production costs and fixed operating expenses could be reduced by $190,000 and $37,800, respectively. If Proposal 3 is selected, it is anticipated that an additional annual expenditure of $113,400 for the salary of an assistant brand manager (classified as a fixed operating expense) would yield an increase of 130% in Size S sales volume. It is also assumed that the increased production of Size S would utilize the plant facilities released by the discontinuance of Size M. The sales and costs have been relatively stable over the past few years, and they are expected to remain so for the foreseeable future. The income statement for the past year ended January 31, 2013, is as follows: Size S M L $1,260,000 Total $4,030,000 $1,320,000 $1,450,000 Sales Cost of goods sold: Variable costs. Fixed costs Total cost of goods sold Gross profit Less operating expenses: Variable expenses Fixed expenses Total operating expenses Income from operations. $ 718,000 321,300 $1,039,300 $ 280,700 $ 958,000 384,000 $1,342,000 $ 108,000 $ 756,000 334,000 $1,090,000 $ 170,000 $2,432,000 1,039,300 $3,471,300 $ 558,700 $ 157,500 42,840 $ 200,340 $ 80,360 $ 145,000 56,700 $ 201,700 $ (93,700) $ 113,400 19,000 $ 132,400 $ 37,600 $ 415,900 118,540 $ 534,440 $ 24,260Step by Step Solution
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