Mohave Corp. is considering eliminating a product from its Sand Trap line of beach umbrellas. This collection is almed at people who spend time on the beach or have an outdoor patio near the beach. Two products, the Indigo and Verde umbrellas, have impressive sales. However, sales for the Azul model have been dismal. Mohave's Information related to the Sand Trap line is shown below. Segmented Income Statement for Mohave's Sand Trap Beach Umbrella Products Indigo Verde Azul Total Sales revenue $60,000 $60,000 $30,000 $150,000 Variable costs 34,000 31,000 26,000 91,000 Contribution margin $26.000 $29,000 $ 4,000 559.000 Leo: Direct fixed costs 1,900 2,500 2.000 6,400 Segment margin $24,100 $26,500 $ 2,000 $ 52,600 Common fixed costs. 17,840 17,840 8.920 44,600 Net operating income (lons) $ 6,260 $ 8,660 $16.920) S 8.000 *Allocated based on total sales revenue Mohave has determined that eliminating the Azul model would cause sales of the Indigo and Verde models to increase by 10 percent and 15 percent, respectively. Variable costs for these two models would increase proportionately. Although the direct fixed costs could be eliminated, the common fixed costs are unavoidable. The common fixed costs would be redistributed to the remaining two products, Required: 1-a. Complete the table given below, assuming Mohave Corp drops the Azul line. 1-b. Will Mohave's net operating income increase or decrease if the Azul model is eliminated? By how much? 2. Should Mohave drop the Azul model? 3-a. Complete the table given below assuming that Mohave had no direct fixed overhead in its production Information and the entire $51,000 of fixed cost was common fixed cost. 3-b. Should Mohave drop the Azul model? 3-c. What is the increase or decrease in the net operating income of Mohave? 1-a. Complete the table given below, assuming Mohave Corp. drops the Azul line. 1-b. Will Mohave's net operating income increase or decrease if the Azul model is eliminated? By how much? 2. Should Mohave drop the Azul model? 3-a. Complete the table given below assuming that Mohave had no direct fixed overhead in its production information ar $51,000 of fixed cost was common fixed cost. 3-b. Should Mohave drop the Azul model? 3-c. What is the increase or decrease in the net operating income of Mohave? Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 2 Reg 3 Req 3B Reg 3C Complete the table given below, assuming Mohave Corp. drops the Azul line. (Do not round intermediate calculations. Round Common Fixed Costs to the nearest whole dollar.) s $ Sales Revenue Variable Costs Contribution Margin Direct Fixed Costs Segment Margin Common Fixed Costs Net Operating income (Loss) Indigo 66,000 37.400 28,600 1,900 26,700 21.804 4,896 Verde 69,000 35,650 33,350 2,500 30,850 22,796 8,054 Total $ 135,000 73,050 61,950 4.400 57,550 44,000 $ 12,950 30 $ Req 18 ) 1-a. Complete the table given below, assuming Mohave Corp. drops the Azul line. 1-b. Will Mohave's net operating income increase or decrease if the Azul model is eliminated? By how much? 2. Should Mohave drop the Azul model? 3-a. Complete the table given below assuming that Mohave had no direct fixed overhead in its production information and the er $51,000 of fixed cost was common fixed cost. 3-b. Should Mohave drop the Azul model? 3-c. What is the increase or decrease in the net operating Income of Mohave? Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3 Reg 38 Req3C Complete the table given below assuming that Mohave had no direct fixed overhead in its production information and the entire $51,000 of fixed cost was common fixed cost. Change in Contribution Margin Contribution Margin Gained on Indigo Contribution Margin Gained on Verde Contribution Margin Lost on Azul Net Increase in Contribution Margin Change in Fixed Costs Not Change in Profit if Azulis Eliminated TU IN CICCHICOUVY. VnUIG LUI MISIC 4U HRVUCIS UIL CUOC pourUUTTUIT. PU be eliminated, the common fixed costs are unavoidable. The common fixed costs would be redistribut products. Required: 1-a. Complete the table given below, assuming Mohave Corp. drops the Azul line. 1-b. Will Mohave's net operating income increase or decrease if the Azul model is eliminated? By how 2. Should Mohave drop the Azul model? 3-a. Complete the table given below assuming that Mohave had no direct fixed overhead in its product $51,000 of fixed cost was common fixed cost. 3-b. Should Mohave drop the Azul model? 3-c. What is the increase or decrease in the net operating income of Mohave? Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3A Reg 3B Reg 3C What is the increase or decrease in the net operating income of Mohave? Change in Net Operating Income (Loss)
