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Suppose Grainy Day is considering discontinuing its coco crispies product line. Assume that during the past year, the coco crispies' product line income statement showed
Suppose Grainy Day is considering discontinuing its coco crispies product line. Assume that during the past year, the coco crispies' product line income statement showed the following: Click the icon to view the income statement data.iClick the icon for additional information. If the company decides to discontinue the product line, what will happen to the company's operating income? Should Grainy Day discontinue the coco crispies product line? Begin by preparing a contribution margin income statement for the coco crispies' product line. Use a minus sign or parentheses to enter a loss. Sales revenue Less: Contribution margin Less: Operating income loss Data table More info Fixed manufacturing overhead costs account for of the cost of goods, while only of the operating expenses are fixed. Since the coco crispies line is just one of the company's cereal operations, only $ of direct fixed costs the majority of which is advertising will be eliminated if the product line is discontinued. The remainder of the fixed costs will still be incurred by the company.
Suppose Grainy Day is considering discontinuing its coco crispies product line. Assume that during the past year, the coco crispies' product line income statement showed the following:
Click the icon to view the income statement data.iClick the icon for additional information.
If the company decides to discontinue the product line, what will happen to the company's operating income? Should Grainy Day discontinue the coco crispies product line?
Begin by preparing a contribution margin income statement for the coco crispies' product line. Use a minus sign or parentheses to enter a loss.
Sales revenue
Less:
Contribution margin
Less:
Operating income loss
Data table
More info
Fixed manufacturing overhead costs account for of the cost of goods, while
only of the operating expenses are fixed. Since the coco crispies line is just
one of the company's cereal operations, only $ of direct fixed costs the
majority of which is advertising will be eliminated if the product line is
discontinued. The remainder of the fixed costs will still be incurred by the company.
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