Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sales revenue Variable costs Contribution margin Direct fixed costs Segment margin Common fixed costs Net income (loss) Printers Ink Cartridges Monitors 20,000,000 110,000,000 34,200,000 19,650,000
Sales revenue Variable costs Contribution margin Direct fixed costs Segment margin Common fixed costs Net income (loss) Printers Ink Cartridges Monitors 20,000,000 110,000,000 34,200,000 19,650,000 68,720,000 27,600,000 350,000 41,280,000 6,600,000 400,000 3,000,000 610,000 (50,000) 38,280,000 5,990,000 800,000 3,200,000 750,000 (850,000) 35,080,000 5,240,000 Routers Total 12,000,000 176,200,000 10,300,000 126,270,000 1,700,000 49,930,000 300,000 4,310,000 1,400,000 45,620,000 2,000,000 6,750,000 (600,000) 38,870,000 An influential VP within the company has recommended that the company discontinue production and sales of printers and routers, since each has an overall net loss. a) Assuming that none of the common fixed costs allocated to printers would be avoidable, by how much would the company's net income increase or (decrease) if it discontinued production of printers? b) Assuming that none of the common fixed costs allocated to routers would be avoidable, by how much would the company's net income increase or (decrease) if it discontinued production of routers? c) Discuss the concept of "complimentary products and any effect such a relationship might have on the decision to drop either the printers or routers from production
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started