Question
In: Accounting
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...
Keep-or-Drop Decision
Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:
| Alanson | Boyne | Conway | Total | ||||||
| Sales revenue | $1,280 | $185 | $405 | $1,870 | |||||
| Less: Variable expenses | 1,115 | 45 | 304 | 1,464 | |||||
| Contribution margin | $165 | $140 | $101 | $406 | |||||
| Less direct fixed expenses: | |||||||||
| Depreciation | 50 | 15 | 11 | 76 | |||||
| Salaries | 95 | 85 | 112 | 292 | |||||
| Segment margin | $20 | $40 | $(22) | $38 | |||||
Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.
Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped.
Required:
CONCEPTUAL CONNECTION: Estimate the impact on profit that would
result from dropping Conway. Enter amount in full, rather than in
thousands. For example, "15000" rather than "15".
Decrease $_______
Should Petoskey keep or drop Conway?
Keep
PLEASE EXPLAIN STEP BY STEP.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...
Keep-or-Drop Decision
Petoskey Company produces three products: Alanson, Boyne, and
Conway. A segmented income statement, with amounts given in
thousands, follows:
Alanson
Boyne
Conway
Total
Sales revenue
$1,280
$185
$375
$1,840
Less: Variable expenses
1,115
45
300
1,460
Contribution margin
$165
$140
$75
$380
Less direct fixed expenses:
Depreciation
50
15
15
80
Salaries
95
85
80
260
Segment margin
$20
$40
$(20)
$40
Direct fixed expenses consist of depreciation and plant
supervisory salaries. All depreciation on the equipment is...
Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with...
Keep-or-Drop Decision Petoskey Company produces three products:
Alanson, Boyne, and Conway. A segmented income statement, with
amounts given in thousands, follows: Alanson Boyne Conway Total
Sales revenue $1,280 $185 $285 $1,750 Less: Variable expenses 1,115
45 228 1,388 Contribution margin $165 $140 $57 $362 Less direct
fixed expenses: Depreciation 50 15 15 80 Salaries 95 85 72 252
Segment margin $20 $40 $(30) $30 Direct fixed expenses consist of
depreciation and plant supervisory salaries. All depreciation on
the equipment is...
etoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given...
etoskey Company produces three products: Alanson, Boyne, and
Conway. A segmented income statement, with amounts given in
thousands, follows:
Alanson
Boyne
Conway
Total
Sales revenue
$1,280
$185
$390
$1,855
Less: Variable expenses
1,115
45
293
1,453
Contribution margin
$165
$140
$97
$402
Less direct fixed expenses:
Depreciation
50
15
15
80
Salaries
95
85
116
296
Segment margin
$20
$40
$(34)
$26
Direct fixed expenses consist of depreciation and plant
supervisory salaries. All depreciation on the equipment is
dedicated to...
Structuring a Keep-or-Drop Product Line Problem Shown below is a segmented income statement for Hickory Company's...
Structuring a Keep-or-Drop Product Line Problem
Shown below is a segmented income statement for Hickory
Company's three wooden flooring product lines:
Strip
Plank
Parquet
Total
Sales revenue
$400,000
$200,000
$300,000
$900,000
Less: Variable expenses
225,000
120,000
250,000
595,000
Contribution margin
$175,000
$ 80,000
$ 50,000
$305,000
Less direct fixed expenses:
Machine rent
(5,000)
(20,000)
(50,000)
(75,000)
Supervision
(15,000)
(10,000)
(20,000)
(45,000)
Depreciation
(35,000)
(10,000)
(25,000)
(70,000)
Segment margin
$120,000
$ 40,000
$ (45,000)
$115,000
Hickory's management is deciding whether to...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with
Complementary Effects
Shown below is a segmented income statement for Hickory
Company's three wooden flooring product lines:
Strip
Plank
Parquet
Total
Sales revenue
$400,000
$200,000
$300,000
$900,000
Less: Variable expenses
225,000
120,000
250,000
595,000
Contribution margin
$175,000
$ 80,000
$ 50,000
$305,000
Less direct fixed expenses:
Machine rent
(5,000)
(20,000)
(30,000)
(55,000)
Supervision
(15,000)
(10,000)
(5,000)
(30,000)
Depreciation
(35,000)
(10,000)
(25,000)
(70,000)
Segment margin
$120,000
$ 40,000
$ (10,000)
$150,000
Hickory's management is...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with
Complementary Effects Shown below is a segmented income statement
for Hickory Company's three wooden flooring product lines: Strip
Plank Parquet Total Sales revenue $400,000 $200,000 $300,000
$900,000 Less: Variable expenses 225,000 120,000 250,000 595,000
Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct
fixed expenses: Machine rent (5,000) (20,000) (30,000) (55,000)
Supervision (15,000) (10,000) (5,000) (30,000) Depreciation
(35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $
40,000 $ (10,000) $150,000 Hickory's management is...
Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement...
Structuring a Keep-or-Drop Product Line Problem with
Complementary Effects
Shown below is a segmented income statement for Hickory
Company's three wooden flooring product lines:
Strip
Plank
Parquet
Total
Sales revenue
$400,000
$200,000
$300,000
$900,000
Less: Variable expenses
225,000
120,000
250,000
595,000
Contribution margin
$175,000
$ 80,000
$ 50,000
$305,000
Less direct fixed expenses:
Machine rent
(5,000)
(20,000)
(30,000)
(55,000)
Supervision
(15,000)
(10,000)
(5,000)
(30,000)
Depreciation
(35,000)
(10,000)
(25,000)
(70,000)
Segment margin
$120,000
$ 40,000
$ (10,000)
$150,000
Hickory's management is...
Discuss the qualitative factors in Keep or Drop Decision in details
Discuss the qualitative factors in Keep or Drop Decision in
details
Discuss the qualitative factors in Keep or Drop Decision in details.
Discuss the qualitative factors
in Keep or Drop Decision in details.
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is...
Keep-Or-Drop Decision, Alternatives, Relevant Costs
Reshier Company makes three types of rug shampooers. Model 1 is
the basic model rented through hardware stores and supermarkets.
Model 2 is a more advanced model with both dry-and wet-vacuuming
capabilities. Model 3 is the heavy-duty riding shampooer sold to
hotels and convention centers. A segmented income statement is
shown below.
Model 1
Model 2
Model 3
Total
Sales
$260,000
$586,000
$641,000
$1,487,000
Less variable costs of goods sold
(86,500)
(174,200)
(359,600)
(620,300)
Less...
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