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Real-world companies often reduce the complexity of their operations in an attempt to increase profits. In late 2014 and early 2015 McDonnell's Corporation announced a series of restructuring efforts it planned to undertake to improve profitability. One of these was to reduce the number of items offered for sale in its restaurants. In October 2014. Standard Engines announced plans to reduce the number of vehicle production platforms on which it builds cars from 26 to four by 2025. In 2010, Megasave, Inc., one of the largest grocery store companies in the United States, announced it was planning to reduce the number of different items it carries in its inventory by as much as 25 percent. Megasave is one of the largest grocery store companies in the United States Most of the planned reduction in inventory items at Megasave was going to be accomplished by reducing the number of different package sizes rather than by reducing entire product brands. The new approach was intended to allow the company to get better prices from its vendors and to put more emphasis on its own store brands Consider the additional information presented below, which is hypothetical. All dollar amounts are in thousands, unit amounts are not Assume that Megasave decides to eliminate one product line, Sugar Bits, for one of its segments that currently produces three products. As a result, the following are expected to occur. (1) The number of units sold for the segment is expected to drop by only 40.000 because of the elimination of Sugar Bits, since most customers are expected to purchase a Fiber-Treats or Carbo-Crunch product instead. The shift of sales from Sugar-Bits to Fiber- Treats and Carbo-Crunch is expected to be evenly split. In other words, the sales of Fiber-Treats and Carbo-Crunch will each increase by 195,000 units (2) Rent is paid for the entire production facility, and the space used by Sugar-Bits cannot be sublet. (3) Utilities costs are expected to be reduced by $38,000. (4) All of the supervisors for Sugar-Bits were all terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch (5) The equipment being used to produce Sugar Bits is also used to produce the other two products. However, the company believes that as a result of eliminating Sugar-Bits it can dispose of equipment that has a remaining useful life of 5 years, and a projected salvage value of $35.000. Its current market value is $50,000. (6) Facility-level costs will continue to be allocated between the product lines based on the number of units produced 1 of 1 !!! Next Carbo- Crunch 580,000 $588,780 Sugar- Bits 290, 29 $294,350 Total 1 ,450,000 $1,471,750 Product-Line Earnings Statements (Dollar amounts are in thousands) Annual Costs of Operating Each Product Line Fiber- Sales in units Treats Sales in dollars 580,080 Unit-level costs: $588,780 Cost of production Sales commissions 58,800 Shipping and handling 8,120 Miscellaneous 13,92e Total unit-level costs 3,480 Product-level costs: 83,520 Supervisors' salaries Facility-level costs: 5,800 Rent Utilities 58,000 Depreciation on equipment 69,600 Allocated company-wide expenses 232,000 Total facility-level costs 17.400 Total product cost 377.000 Profit on products 466,320 $122,380 58,000 8,120 12.180 1.740 80,040 31,980 2.900 5,800 2.900 43,500 147,900 19.140 31,900 8,120 207,060 4,800 1,450 12,050 58, 69,600 232,000 17.400 377.000 461,840 $126,860 29,00 34,800 116,000 8,700 188.500 233,450 S60,900 145,000 174.000 580,000 43,500 942,500 1,161,510 $ 310,140 Required Prepare revised product-line earnings statements based on the elimination of Sugar.Bits. (Hint it will be necessary to calculate some per-unit data to accomplish this ) (Enter your answers in thousands. Do not round Intermediate calculations. Enter all amounts as positive values.) Total Revised Product-line Earnings Statements Annual Costs of Operating Each Product Line Fiber-Treats Carbo Crunch Sales in units Sales in dollars Unit-level costs: Cost of production Sales commissions Shipping and handling Miscellaneous 1 Total unit-level costs Product-level costs Supervisors salaries 1 Facility-level costs: Rent Utilities Depreciation on equipment Allocated company-wide expenses 1 Total facility-level costs Prev 1 of 1 Cost of production Sales commissions Shipping and handling Miscellaneous Total unit-level costs Product-level costs: Supervisors salaries Facility-level costs: Rent Utilities Depreciation on equipment Allocated company-wide expenses Total facility-level costs Total product cost Profit on products Sale of Sugar-Bits' equipment Segment earnings