Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Shown below is a segmented income statement for Suka Brand for their three flavors of almond milk: original, matcha, and banana. Original Matcha Banana Total

Shown below is a segmented income statement for Suka Brand for their three flavors of almond milk: original, matcha, and banana.

Original

Matcha

Banana

Total

Sales revenue

$55,000

$49,000

$36,000

$140,000

Less: Variable expenses

($17,000)

($25,000)

($22,000)

($64,000)

Contribution margin

$38,000

$24,000

$14,000

$76,000

Less: direct fixed expenses:

($14,800)

($15,950)

($15,700)

($46,450)

Segment margin

$23,200

$8,050

($1,700)

$29,550

Less : Common fixed expenses

($13,250)

Operating Income (loss)

$16,300

Amanda Burch, as the financial manager of Suka Brand, is concerned about the financial performance and considering dropping the Banana Almond Milk flavor. After further investigation, she found out that the Banana Almond Milk flavor is using a low-quality Banana essence and not all of the customers have a positive feedback about this product.

Required:

  1. Amanda believes that by using a high-quality Banana essence with additional cost $2 for each bottle will have a positive feedback from customers, that all of the 1,250 bottles produced are sold and increase the sales revenue by 45%. Would Amanda still consider dropping the Banana Almond Milk Flavor?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Sound Investing, Chapter 18 - Significant Accounting Policies And Changes In Them

Authors: Kate Mooney

3rd Edition

0071719407, 9780071719407

More Books

Students also viewed these Accounting questions

Question

5. How is Mr. Bonner encouraging Marcuss self-efficacy?

Answered: 1 week ago

Question

4. Explain how to price managerial and professional jobs.pg 87

Answered: 1 week ago