Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please solve this problem for me and explain why the allocated fixed costs are included in B and not direct fixed costs. Add or drop
please solve this problem for me and explain why the allocated fixed costs are included in B and not direct fixed costs. Add or drop a product, service or segment Example A company has three products: Product A, Product B and Product C. Income statements of the three product lines for the latest month are given below: Product Line Sales 467,000 314,000 Variable Costs 241,000 169,000 Contribution Margin 226,000 145,000 Direct Fixed Costs 91,000 86,000 Allocated Fixed Costs 93,000 62,000 Net Income 42,000 - $3,000 Use the incremental approach to determine if Product B should be dropped. 598,000 321,000 277,000 112,000 120,000 45,000
please solve this problem for me and explain why the allocated fixed costs are included in B and not direct fixed costs.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started