Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's most popular products appear below. Fishing Guard $
Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's most popular products appear below. Fishing Guard $ 930,000 $268,000 $ 408,000 $ 254,000 Ski Guard Golf Guard Total Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 113,000 155,000 475,000 209,000 153,000 101,000 455,000 199,000 69,800 43,700 8,400 20,400 40,400 53,600 40,500 7,300 38,300 20,900 16,000 35,800 50,800 114,500 186,000 81,600 414,000 122,800 167,700 123,500 Net operating income (loss) 41,000 $ 32, 200 31,300 $(22,500) *Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the fishing guards and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce fishing guards has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the fishing guard model? 2. Should the production and sale of fishing guards be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the fishing guards? < Required 1 Required 2 >
Step by Step Solution
★★★★★
3.42 Rating (158 Votes )
There are 3 Steps involved in it
Step: 1
1 Financial Disadvantage 44300 Working Note Loss of Contribution margin by dropping f...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