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Hong Publishing has purchased Lang Publishing. After reviewing titles from both companies, a decision must be made to determine what titles must be dropped. The
Hong Publishing has purchased Lang Publishing. After reviewing titles from both companies, a decision must be made to determine what titles must be dropped. The following information is available to make the decision. Title X Title Y Title z Sales $99,000 $ 151,000 $ 201,000 Variable Cost 50,000 74,000 101,000 Contribution Margin $49,000 $77,000 $100,000 Direct Fixed Cost 20,000 29,000 41,000 Allocated Common Fixed Cost 9,000 16,000 19,000 Net Income $20,000 $32,000 $40,000 A. What is the total income if all titles were produced? 90,000 X B. If Title X was dropped, what would be the effect on Net Income? Loss C. How much did Title X Contribute to Fixed Costs? D. Determine the cost and the amount that will remain even if Title X is dropped. Allocated Fixed Cost $ $ Loss C. How much did Title X Contribute to Fixed Costs? D. Determine the cost and the amount that will remain even if Title X is dropped. Allocated Fixed Cost $ E. Which costs and amount will be eliminated if Title X is dropped? Contribution Margin Direct Fixed Cost
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