Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Mr. Ali, accountant for Samsung Co., Inc., has prepared the following product-line income data: Product Total B Sales.... Variable expenses Contribution margin Fixed expenses: $100,000
Mr. Ali, accountant for Samsung Co., Inc., has prepared the following product-line income data: Product Total B Sales.... Variable expenses Contribution margin Fixed expenses: $100,000 $50,000 $20,000 $30,000 20,000 10,000 60,000 40,000 30,000 20.000 10,000 10.000 Rent.... 2,500 3,000 1,000 1,200 500 500 1,500 1,800 1,500 3,000 5,000 6,000 4,000 5,000 Depreciation. Utilities 2,000 1,500 1,500 3,000 13,500 $6,500 Supervisors' salaries Maintenance Administrative expenses.. Total fixed expenses.. 3,000 10,000 33,000 S 7,000 600 900 5,000 13,700 S( 3,700) 2,000 5,800 S 4,200 Net operating income The following additional information is available: * The factory rent of $1,500 assigned to Product C is avoidable if the product were dropped. * The company's total depreciation would not be affected by dropping C. * Eliminating Product C will reduce the monthly utility bill from $1,500 to $800. * All supervisors' salaries are avoidable. * If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000. * Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000. Required: Prepare an analysis showing whether Product C should be eliminated or not
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started