The information below was extracted from the books of Battle Field Ltd for the year ended December 31, 2019 Battle Field Ltd Condensed Income Statement For the Year Ended December 31, 2019 Sardines GHS Tuna Flakes GHS Oatmeal GHS Total GHS Sales 500,000 400,000 100,000 1,000,000 Costs of goods sold Variable costs 220,000 200,000 60,000 480,000 Fixed costs 120,000 80,000 20,000 220,000 Total cost of goods sold 340,000 280,000 80,000 700,000 Gross profit 160,000 120,000 20,000 300,000 Operating expenses Variable expenses 95,000 60,000 25,000 180,000 Fixed expenses 25,000 20,000 6,000 51,000 Total operating expenses 120,000 80,000 31,000 231,000 Income (loss) from operations 40,000 40,000 (11,000) 69,000 Management is contemplating on whether or not to discontinue Oatmeal Required a Advise management whether or not to discontinue Oatmeal and support your answer with calculations depicting the contribution derived from Oatmeal and the effect of discontinuing oatmeal on overall profits of battle field Limited b Most Management decisions are affected by the nature, purpose and behavior of costs You have been tasked by the management of battlefield Limited to educate the staff of its Accounts department on the effects of the various classifications of costs on their decisions Organize your notes for this presentation

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The information below was extracted from the books of Battle Field Ltd for the year ended December 31, 2019. Battle Field Ltd. Condensed Income Statement

The information below was extracted from the books of Battle Field Ltd for the year ended December 31, 2019.

Battle Field Ltd.

Condensed Income Statement

For the Year Ended December 31, 2019

Sardines GHS

Tuna Flakes GHS

Oatmeal GHS

Total GHS

Sales

500,000

400,000

100,000

1,000,000

Costs of goods sold:

Variable costs

220,000

200,000

60,000

480,000

Fixed costs

120,000

80,000

20,000

220,000

Total cost of goods sold

340,000

280,000

80,000

700,000

Gross profit

160,000

120,000

20,000

300,000

Operating expenses:

Variable expenses

95,000

60,000

25,000

180,000

Fixed expenses

25,000

20,000

6,000

51,000

Total operating expenses

120,000

80,000

31,000

231,000

Income (loss) from operations

40,000

(11,000)

69,000

Management is contemplating on whether or not to discontinue Oatmeal.

Required:

a.Advise management whether or not to discontinue Oatmeal and support your answer with calculations depicting the contribution derived from Oatmeal and the effect of discontinuing oatmeal on overall profits of battle field Limited.

b.Most Management decisions are affected by the nature, purpose and behavior of costs. You have been tasked by the management of battlefield Limited to educate the staff of its Accounts department on the effects of the various classifications of costs on their decisions. Organize your notes for this presentation.