Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Swanson Inc. manufactures wooden furniture. It currently makes two products: Chairs and Cribs. It is considering eliminating Cribs because the product line is unprofitable.

image text in transcribed

Swanson Inc. manufactures wooden furniture. It currently makes two products: Chairs and Cribs. It is considering eliminating Cribs because the product line is unprofitable. The company's most recent contribution margin income statement is as follows: Swanson Inc. Contribution Margin Income Statement Total (Company) Chairs Cribs Sales Revenue $140,000 $100,000 $40,000 Less: Variable 117,000 80,000 37,000 Costs Contribution 23,000 20,000 3,000 Margin Less: Fixed Costs 15,000 7,000 8,000 Net Operating $8,000 $13,000 ($5,000) Income If Swanson Inc. eliminates Cribs, $3,000 of fixed costs will not be eliminated. Compute change in Swanson Inc's net operating income be if Cribs is eliminated.

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

Survey of Accounting

Authors: Carl S Warren

5th Edition

9780538489737, 538749091, 538489731, 978-0538749091

More Books

Students also viewed these Accounting questions