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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. The
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. (Leave no cells blank. Enter zeros where appropriate.) $3,100,000 MARINETTE COMPANY Income Statement-Canoe Segment Sales Variable costs Direct materials $ 670,000 Direct labor 720,000 Variable overhead 520,000 Variable selling and administrative 310,000 Total variable costs Contribution margin Fixed costs Direct 595,000 Indirect 520,000 Total fixed costs 2,220,000 880,000 1,115,000 $ (235,000) Net income 1. If canoes are discontinued, calculate the net income lost or gained. Keep the department $ 3,100,000 Eliminate the department Sales Expenses Direct materials 670,000 Direct labor 720,000 Variable overhead 520,000 Keep the department $ 3,100,000 Eliminate the department Sales Expenses Direct materials Direct labor Variable overhead 670,000 720,000 520,000 310,000 595,000 Variable selling and administrative costs Direct fixed costs 520,000 Indirect fixed costs Direct fixed costs Total expenses 2,815,000 285,000 520,000 (520,000) Net income (loss) $ $ The canoe division should be: If the canoe division is eliminated, income will be: 2. Should management discontinue the manufacturing of canoes? O No Yes
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