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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 $ 928,000 $265,000 $ 409,000 $ 254,000 459,000 115,000 194,000 150,000 469,000 150,000 215,000 104,000 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) 69,600 8,500 40,500 20,600 43,600 20,200 7,600 15,800 114,400 40,200 38,800 35,400 185,600 53,000 81,800 50,800 413,200 121,900 168,700 122,600 $ 55,800 $ 28,100 $ 46,300 $(18,600) *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 no 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of fishing guards be discontinued? OYes No 1 Required 1 Required 2 Required 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. Totals Ski Guards Golf Guards Fishing Guards Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)
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