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Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line.
Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is available regarding its canoe segment. MARINETTE COMPANY Income Statement-Canoe Segment Sales $3,400,000 Variable costs Direct materials $730,000 Direct labor 780,000 Variable overhead 580,000 Variable selling and administrative 340,000 Total variable costs Contribution margin 2,430,000 970,000 Fixed costs Direct Indirect 655,000 580,000 Total fixed costs Net income 1,235,000 $ (265,000) 1. If canoes are discontinued, calculate the net income lost or gained. 2. Should management discontinue the manufacturing of canoes?
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