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I I'm trying to figure out the Net Income for the Fruits and Nuts column. Can anyone solve? I'm completely stuck. Bravo Baking Co has
I
I'm trying to figure out the Net Income for the Fruits and Nuts column. Can anyone solve? I'm completely stuck.
Bravo Baking Co has expanded its product line to include several other specialty breads. The operating results for the last quarter are provided below. Product Revenues Variable product costs Variable Selling & Administrative costs Contribution Margin Fixed Product Costs Fixed Selling and Administrative Costs Allocated Common Costs Hi-Lo Whole Grain Fruit & Nuts Total $67,575 $31,800 $15,900 $115,275 $27,030 $12,720 $6,360 $46,110 $13,515 $6,360 $3,180 $23,055 $27,030 $12,720 $6,360 $46,110 $5,000 $5,000 $5,000 $15,000 $5,700 $2,850 $2,850 $ 11,400 $5,000 $2,500 $2,500 $10,000 $11,330 $2,370 ($3,990) $9,710 Net Income Required: Bravo wants to know the effect on Net Income if it decides to discontinue the Fruit & Nuts product. If Bravo eliminates Fruit & Nuts 50% offixed costs can be avoided. Prepare and incremental analysis showing the Net Income Effect of eliminating the Fruit & Nuts product. What would you advise Bravo to do? Using the Table below, compute the Net Income for Bravo Baking after eliminating the Fruit & Nuts product. Product Hi-Lo Whole Grain Fruit & Nuts Total Revenues $67,575 $31,800 $0 $99,375 Correct Variable product costs $27,030 $12,720 $0 $39,750 Correct Variable Selling & Administrative costs $13,515 $6,360 $0 $19,875 Correct Contribution Margin $27,030 $12,720 $0 $39,750 Correct Fixed Product Costs $5,000 $5,000 $2,500 $12,500 Correct Fixed Selling and Administrative Costs $5,700 $2,850 $1,425 $9,975 Correct Allocated Common Costs $5,000 $2,500 $2,500 $10,000 Correct Net Income $11,300 $2,370 $13,670 Try Again Points 35 Based on your analysis, what recommendation would you make about Fruit & Nuts? ExplainStep by Step Solution
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