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Furst, Inc. believed it could increase the company's profits by eliminating some product-lines. Other companies have also tried to improve their financial performance by downsizing. In November 2017, General Electric announced it would begin a downsizing operation that would result in their exiting businesses using over $20 billion in assets in the next one to two years. In January 2018, Newell Brands, the company whose products include Tupperware, Sharpie pens, Elmer's Glue, and Rawlings sports products, announced it would be reducing its product offerings to the extent that it would close half of its facilities and reduce its revenues by 20 percent. Consider the additional information presented as follows, which is hypothetical. All dollar amounts are in thousands, unit amounts are not. Assume that Furst decides to eliminate one shampoo product-line, Luster, 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 150,000 because of the elimination of Luster, since most customers are expected to purchase a Anagen or Catagen product instead. The shift of sales from Luster to Anagen and Catagen is expected to be evenly split. In other words, the sales of Anagen and Catagen will each increase by 35,000 units. (2) Rent is paid for the entire production facility, and the space used by Luster cannot be sublet. (3) Utilities costs are expected to be reduced by $40,000. (4) All of the supervisors for Luster were all terminated. No new supervisors will be hired for Anagen or Catagen. (5) Half of the equipment being used to produce Luster is also used to produce the other two products and its depreciation cost must be absorbed by them. The remaining equipment has a remaining a book value of $365,000 and can be sold for only $85.000 (6) Facility-level costs will continue to be allocated between the product lines based on the number of units produced, Product Line Earnings statements (Dollar amounts are in thousands) Annual Coats of Operating Each Product Line Anagen Catagen Sales in units 440,000 440,000 Sales in dollars $880,000 880,000 Luster 220.000 $440,000 Total 1.100.000 $2,200,000 Product-Line Earnings Statements (Dollar amounts are in thousands) Annual Costs of Operating Each Product Line Anagen Catagen Sales in units 440,000 440,000 Sales in dollars $880,000 $800,000 Unit-level costs: Cost of production 83,600 83,600 Sales commissions 11,440 11,440 Shipping and handling 19.800 17.600 Miscellaneous 6,600 4,400 Total unit-level costs 121,440 117,040 Product-level costs: Supervisors' salaries 8,800 6,800 Facility-level costat Rent 97,000 97,000 Utilities 110,000 110.000 Depreciation on equipment 392,000 392,000 Allocated company-vide expenses 22.000 22.000 Total facility-level costs 621,000 621,000 Total product cost 751, 240 744,840 Profit on products $128,760 $135,160 Luster 220,000 $440,000 45,100 5,700 8,800 2,400 62,000 Total 1,100,000 $2,200,000 212,300 28,580 46,200 13,400 300,480 2,200 17,800 48,000 55,000 194,000 11.000 308,000 372,200 $ 67,800 242,000 275,000 978.000 55,000 1,550,000 1,868, 280 $ 331,720 Required Prepare revised product-line earnings statements based on the elimination of Luster. (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.) Totals 950,000 $ 1,900,000 nts Revised Product-line Earnings Statements Annual Costs of Operating Each Product Line Anagen Catagen Sales in units 475,000 475,000 Sales in dollars 950,000 $ 950,000 Unit-level costs: Cost of production 90,250 90,250 Sales commissions 12,350 12,350 Shipping and handling 21,375 19,000 Miscellaneous 7,125 4,750 OOOO 180,500 24,700 40,375 11,875 0 257,450 131,100 126,350 Total unit-level costs Product-level costs: Supervisors salaries 8,800 6,800 15,600 Facility-level costs: Rent Utilities Depreciation on equipment Allocated company-wide expenses 121,000 117,500 440,000 121,000 117,500 70,000 O 242,000 235,000 510,000 0 0 0 0 Total facility-level costs Total product cost 131,1001 126,350 257,450 Ular ichiever LSLS Product-level costs: Supervisors salaries 8,800 6,800 15,600 0 S 121,000 117,500 440,000 121,000 117,500 70,000 242,000 235,000 510,000 Facility-level costs: Rent Utilities Depreciation on equipment Allocated company-wide expenses S Total facility-level costs . Total product cost Profit on products Sale of Luster equipment Segment earnings $ 0 - 0 0 0