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Management is concerned about the low profit associated with the tools product line and is considering dropping this product line. Allocated fixed costs are assigned
Management is concerned about the low profit associated with the tools product line and is considering dropping this product line. Allocated fixed costs are assigned to product lines based on floor space used by each product line (measured in square feet). 1. Perform differential analysis (show work). Which alternative is best? Now assume the space available from dropping tools can be used by the paint dept, resulting in increased revenues of $12,000 and increased variable costs of $4,000. There will be no additional direct fixed costs. 2. Perform differential analysis (show work). Should Hal expand the paint department? 3. Give 2 Qualitative factors that may influence your decisions
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