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The junior accountant for the Bridgerton Bee Company has prepared the following income statement for the most current year: Honey Syrup Other Sales $50,000 $15,000
The junior accountant for the Bridgerton Bee Company has prepared the following income statement for the most current year: Honey Syrup Other Sales $50,000 $15,000 $40,000 Cost of goods sold (variable) 24,000 8,000 19,000 Contribution margin $26,000 $7,000 $21,000 Delivery and ordering costs* 1,000 500 800 Rent (per sq. metre used**) 5,000 3,000 4,000 Allocated corporate costs 5,000 5,000 5,000 Operating income $15,000 $(1,500 $11.200 * Delivery and ordering costs are traceable to the product line. ** The company pays for the entire space and allocates based on sq. metres used. Total $105,000 51,000 $54,000 2,300 12,000 15,000 $24,700 a) In reviewing this statement it appears that the operating income for the Syrup product line is unprofitable. Do you recommend discontinuing the Syrup product line? Why or why not? Note: it would be good to show calculations to justify your
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