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Vogel Co. produces three models of heating and air conditioning thermostat components. This question has man y parts Vogel Co. produces three models of heating
Vogel Co. produces three models of heating and air conditioning thermostat components. This question has man y parts
Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model: BV19 HV41 MV12 Selling price per unit Contribution margin per unit 16 20 10 7 2 7.000 Units sold per month Total contribution margin 3,000 10,000 $21,000 $28,000 $20,000 Direct fixed expenses 10,600 $17,400 7,800 14,500 Segment margin Allocated company fixed expenses $13,200 5,500 7,700 3,300 11,000 9,700 9,900 (5,500) Operating income (loss) Required: a. On what basis does the $22,000 of company fixed expenses appear to be allocated? b. Calculate the effect on total company net income if the MV12 model were discontinued. c. Calculate the contribution margin ratio for each model. d. If an advertising campaign focusing on a single model were to result in an increase of 5,000 units in the quantity of units sold, which model should be advertised? e. If an advertising campaign focusing on a single model were to result in an increase of $34,000 in revenues, which model should be advertisedStep by Step Solution
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