O'Neil Enterprises produces a line of canned soups for sale at supermarkets across the country. Demand has been "soft" recently and the company is operating at 80 percent of capacity. The company is considering dropping one of the soups, beef barley, in hopes of improving profitability. If beef barley is dropped, the revenue associated with it will be lost and the related variable costs saved. The CFO estimates that the fixed costs will also be reduced by 25 percent. The following product line statements are available. Product Broth Beef Barley Minestrone Sales $37,500 $47,600 $56,000 Variable costs 23,600 41,800 43,300 Contribution margin $13,900 $ 5,888 $12,700 Fixed costs allocated to each product line 7,900 9,200 10,300 Operating profit (loss) $ 6,000 $ 3,400 $ 2,480 Required: a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil drop the beef barley line? b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Reg B1 Reg B2 reyuncu. a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil drop the beef barley line? b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Nell drop the beef barley line? Complete this question by entering your answers in the tabs below. Reg A1 Req A2 Req B1 Reg B2 Complete the following differential cost schedule. Alternative: Drop Beef Barley Difference Status Quo Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Required: a-1. Complete the following differential cost schedule. a-2. From an operating profit perspective, should O'Neil drop the beef barley line? b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she poir out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them mights buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Req B1 Req B2 From an operating profit perspective, should O'Neil drop the beef barley line? Yes ONO b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Complete this question by entering your answers in the tabs below. Reg A1 Reg AZ Req B1 Req BZ When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. B1. Complete the following differential cost schedule. Show less Status Puo Alternative: Drop Beef Barley Difference (all lower under the alternative) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) ... HIVII wir b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Req B1 Reg B2 When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped B2. Based on the estimate from the project manager, should O'Nell drop the beef barley line? Show less Yes No
