Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Please answer entirely. Mohave Corp. is considering eliminating a product from its Sand Trap line of beach umbrellas. This collection is aimed at people who

Please answer entirely.image text in transcribedimage text in transcribedimage text in transcribed

Mohave Corp. is considering eliminating a product from its Sand Trap line of beach umbrellas. This collection is aimed at people who spend time on the beach or have an outdoor patio near the beach. Two products, the Indigo and Verde umbrellas, have impressive sales. However, sales for the Azul model have been dismal. Mohave's information related to the Sand Trap line is shown below Segmented Income Statement for Mohave's Sand Trap Beach Umbrella Products Verde Azul Total Sales revenue Variable costs $60,000 $60,000 S30,000 S150,000 31.000 26.000 $26,000 $29,000 S4,000 S 59,000 34,000 91,000 Contribution margin Segment margin Net operating income (loss) Less: Direct Fixed costs 1,900 2,500 2,000 6,400 2,000 S 52,600 20 44,600 $24,100 26,500 2,000 52,600 $26,500 S Common fixed costs* 17,840 17,840 8,9 6260 5 8660 3 (6 920 5 8000 Allocated based on total sales revenue Mohave has detemined that elminating the Azul model would cause sales of the Indigo and Verde models to increase by 10 percent and 15 percent, respectively. Variable costs for these two models would increase proportionately. Although the direct fixed costs could be eliminated, the common fixed costs are unavoidable. The common fixed costs would be redistributed to the remaining two products Required 1-a. Complete the table g?en below, if Mohave Corp drops the Azul line. (Do not round intermediate calculations. Round Common Fixed Costs to the nearest whole dollar.) Indigo Verde Total Sales Revenue Variable Costs Contribution Margin Direct Fixed Costs Segment Margin Common Fixed Costs Net operating income OSS

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions