Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Redhawk Corp. has two product lines - Punt and Blitz. Financial information is as follows. Punt Blitz Blitz Total Sales volume 400 units 200 units
Redhawk Corp. has two product lines - Punt and Blitz. Financial information is as follows. Punt Blitz Blitz Total Sales volume 400 units 200 units 600 units Sales revenue $200,000 $150,000 $350,000 Less: Variable cost of sales 96,000 60,000 156,000 Variable selling and administrative 10,000 _7,500 17,500 Contribution margin $ 94,000 $ 82,500 $176,500 Less: Product-related fixed expenses 30,000 85,000 |115,000 Contribution to allocated fixed costs $ 64,000 $ (2,500) $ 61,500 Less: Allocated fixed costs 15,000 15,000 |_ 30,000 Net income before taxes $ 49,000 $(17,500). $ 31,500 Should the Blitz product line be eliminated? Why or why not? 0 Yes, because Blitz does not generate enough contribution margin to cover its fixed costs. O No, because Blitz generates a positive contribution margin O Yes, because Blitz net income before taxes is negative. O No, because Blitz has a higher contribution margin per unit that Punt
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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