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Problem 6.2 The segment report for the NSB Book Store has prepared the following segmented income statement for the most current year. Cookbook Pocketbook Classics
Problem 6.2 The segment report for the NSB Book Store has prepared the following segmented income statement for the most current year. Cookbook Pocketbook Classics Total Sales P 60,000 P 100,000 P 40,000 P200,000 Variable Expenses 36,000 65,000 20,000 121,000 Contribution Margin 24,000 35,000 20,000 79,000 Other direct costs 20,000 22,000 11,000 53,000 Segment income 4,000 13,000 9,000 26,000 Allocated corporate costs 7,000 7,000 7,000 21,000 Segment/Corporate profit (P3,000) 6,000 2,000 5,000 Instructions: 1. If the cookbook product line had been eliminated prior to this year, determine the total corporate profit that should have been reported by the company. 2. Should Cookbook be eliminated or not? Support your answer and explain. 3. Assume an advertising campaign could increase revenue for any of the products by P15,000. To maximize corporate profits, which product line should receive advertising. Support your answer and explain
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