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Pantheon Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales.
Pantheon Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A product line income statement follows: Pantheon Gaming Income Statement For the Year Ended December 31, 2011 Audio Video Accelerators Total Sales $1,045,000 $2,255,000 $2,200,000 $5,500,000 Less cost of goods sold 575,000 1,240,000 1,870,000 3,685,000 Gross margin 470,000 1,015,000 330,000 1,815,000 Less other variable costs 55,500 69,400 24,300 149,200 Contribution margin 414,500 945,600 305,700 1,665,800 Less direct salaries 157,500 175,200 67,300 400,000 Less common fixed costs: Rent 11,970 25,830 25,200 63,000 Utilities 4,370 9,430 9,200 23,000 Depreciation 5,890 12,710 12,400 31,000 Other administrative costs 79,230 170,970 166,800 417,000 Net income $155,540 $551,460 $24,800 $731,800 Since the profit for accelerator devices is relatively low, the company is considering dropping this product line. Determine the impact on profit of dropping accelerator products. $ Worse off or Better Off If you need to see how the problem is arranged, in the format, please request it from me by email; because everything is straight up from the top to the bottom. Thank you. Remember to answer if it's worse off or better off
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