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Item4 10 points eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 4 Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce:
Item4 10 points eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 4 Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company's performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Green Beans Sweet Peas Tomatoes Sales $ 91,000 $ 135,500 $ 158,700 Variable costs 61,000 118,400 123,300 Contribution margin $ 30,000 $ 17,100 $ 35,400 Fixed costs allocated to each product line 13,580 22,340 34,360 Operating profit (loss) $ 16,420 $ (5,240) $ 1,040 Required: a. Prepare a differential cost schedule. b. Should Gilbert Canned Produce drop the sweet pea product line
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