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Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's most popular products appear below. Ski Guard Golf Guard
Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's most popular products appear below. Ski Guard Golf Guard Fishing Total Guard $ 930,000 $268,800 $ 484,800 $ 258,888 471,888 112,000 2e9,080 150,000 459,880 156,880 195,000 188,888 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 Net operating income (loss) 70,200 8,500 40,800 20,980 43, see 20,300 7,988 15,600 115,700 40, 500 38,200 37,000 186,682 53,600 80,800 51,600 415,700 122,980 167,788 125,100 $43,300 $ 33,180 $ 27,300 $(17,168) *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
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