Question
The following data is for Archery Unlimited, a maker of bows used by archery enthusiasts.All fixed costs are unavoidable regardless of the products offered, and
- The following data is for Archery Unlimited, a maker of bows used by archery enthusiasts.All fixed costs are unavoidable regardless of the products offered, and Archery sells all the products it produces each year.
Beginner
Intermediate
Advanced
Unit Selling price
$40
$200
$400
Unit variable cost
$35
$80
$120
Total fixed cost
$60,000
$200,000
$245,000
Annual volume
7,000
4,000
3,000
Required:
(1)Perform differential analysis to determine what will happen to total profits if the company drops the Beginner product.
(2)Based on the analysis, what would be your recommendation to management regarding dropping of the Beginner product?
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Management And Cost Accounting
Authors: Alnoor Bhimani, Srikant M. Datar, Charles T. Horngren, Madhav V. Rajan
7th Edition
1292232668, 978-1292232669
