Exercise 23-13 Income analysis of eliminating Departments LO A1 Marinette Compan
ID: 2526775 • Letter: E
Question
Exercise 23-13 Income analysis of eliminating Departments LO A1
Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is available regarding its canoe segment. (Leave no cells blank. Enter zeros where appropriate.)
1. If canoes are discontinued, calculate the net income lost or gained.
Income Statement—Canoe Segment Sales $ 3,900,000 Variable costs Direct materials $ 830,000 Direct labor 880,000 Variable overhead 680,000 Variable selling and administrative 390,000 Total variable costs 2,780,000 Contribution margin 1,120,000 Fixed costs Direct 755,000 Indirect 680,000 Total fixed costs 1,435,000 Net income $ (315,000 )
Explanation / Answer
Answer:
Answer:
Keep the department Eliminate the department Sales 3,900,000 Expenses: Variable cost 2,780,000 0 Contribution margin 1,120,000 0 Fixed cost 1,435,000 1,435,000 Net income/loss (315,000) (1,435,000)Related Questions
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