ACC230, Spring 2018 Survey of Accounting Concepts ?Cauri, . secono CHANCE EXAM 2

Question

ACC230, Spring 2018 Survey of Accounting Concepts ?Cauri, . secono CHANCE EXAM 2 . res . stion , The following informatien is for x Company's two products, A and 37,400 40,050 Total contribution margin otal faxed costs Profit -16,750 odabie. xoonpa y plans todrop Product?sa,showe a lost and noease saies or produa A by 530 000. $9,050 $57,0 10 of Product A's g thed costs are wo dable; $28 400 of Product S sfiaed costs are sales igease wit be a need coat increase or S3.400. I, x Corparty eeps Product nand increases Product A sales, what wl be the effect on nmn ponts? Send Feedback

Explanation / Answer

Contribution Margin ratio of Product A 37400/85000 44% Additional Contribution we may get from Increase in sale of Product A 30000*44% 13200 Less: Additional Fixed Costs 3400 Add: Avoidable fixed costs for product B 28400 Less: Contribution loss of product B 40050 Decrease in firms profits 0 -1850

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