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QUESTION 3 The information below was extracted from the books of Battle Field Ltd for the year ended December 31, 2019. Battle Field Ltd. Condensed
QUESTION 3 The information below was extracted from the books of Battle Field Ltd for the year ended December 31, 2019. Battle Field Ltd. Condensed Income Statement For the Year Ended December 31, 2019 Total Sardines GHS Oatmeal GHS GHS Tuna Flakes GHS 400,000 500,000 100,000 1,000,000 Sales Costs of goods sold: Variable costs Fixed costs Total cost of goods sold Gross profit Operating expenses: Variable expenses Fixed expenses Total operating expenses Income (loss) from operations 220,000 120,000 340,000 160,000 200,000 80,000 280,000 120,000 60,000 20,000 80,000 20,000 480,000 220,000 700,000 300,000 95,000 25,000 120,000 40,000 60,000 20,000 80,000 40,000 25,000 6,000 31,000 (11,000) 180,000 51,000 231,000 69,000 Management is contemplating on whether or not to discontinue Oatmeal. a. Required: Advise management whether or not to discontinue Oatmeal and support your answer with calculations depicting the contribution derived from Oatmeal and the effect of discontinuing oatmeal on overall profits of battle field Limited. (9 marks) b. Most Management decisions are affected by the nature, purpose and behavior of costs. You have been tasked by the management of battlefield Limited to educate the staff of its Accounts department on the effects of the various classifications of costs on their decisions. Prepare your notes for this presentation
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