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pany has three product lines in its retail stores: DOOKS, Videos, and music. The allocated mixed costs are based on units sola and are unavoidable.
pany has three product lines in its retail stores: DOOKS, Videos, and music. The allocated mixed costs are based on units sola and are unavoidable. Demand of individual products is not affected by changes in other product lines. Results of the fourth quarter are presented below: Units sold Revenue Variable departmental costs Direct fixed costs Allocated fixed costs Net income (loss) Books 1,000 15,000 3,000 4,400 $24,000 $48,000 $30,000 $1,600 Music 2,000 Incremental savings on direct materials Incremental savings on variable costs 22,000 6,000 8,800 Videos 2,000 $ 23,000 4,000 8,800 $11,200 $(5,800) Total 5,000 $102,000 60,000 13,000 22,000 Prenare an incremental analysis of the effect of dropping the Video product line. (Enter negative amounts using either a negative sign Incremental decrease in profit to drop video line Incremental savings on direct fixed costs Incremental savings on direct labor Incremental revenue $7,000
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