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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 $268,000 $ 408,000 $ 254,000 475,000 113,000 209,000 153,000 455,000 155,000 199,000 101,000 69,800 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) 8,400 43,700 20,400 114,500 40,400 186,000 53,600 414,000 122,800 41,000 $ 32,200 40,500 20,900 7,300 16,000 38,300 35,800 81,600 50,800 167,700 123,500 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?
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