Question

3.  After the combo washer-dryer has been in production for a few years, you are asked to perform another analysis. You must evaluate the performance of all three product lines as management is concerned with the viability of the washer-dryer combination product. They provide you with the latest annual information by product:

	High-End Set	Economical Set	W/D Combo	Total
Sales	$4,700,000	$4,060,000	$880,000	$9,640,000
Labor	$(1,250,000)	$(1,015,000)	$(235,000)	$(2,500,000)
Materials	$(1,885,000)	$(1,220,000)	$(315,000)	$(3,420,000)
Direct fixed costs	$(325,000)	$(220,000)	$(250,000)	$(795,000)
Allocated fixed costs	$(650,000)	$(650,000)	$(650,000)	$(1,950,000)
Net Income	$590,000	$955,000	$(570,000)	$975,000

You are asked to perform an analysis to determine whether to drop or keep the washer-dryer combination product and present your findings, including the steps taken to make your determination. You are also asked to evaluate if the costing methodology is appropriate and, if not, recommend alternative methods.

Please describe the circumstances of the case study and make the required recommendations. Explain your approaches to the problems, perform relevant calculations and analyses, and justify your recommendations. Evaluate the results and explain what each calculated value means. Ensure your work and conclusions are thoroughly supported.

Superior presentations will:

• Describe the circumstances.
• Perform all calculations correctly.
• Articulate how the calculations were performed.
• Evaluate the computations and explain their meanings.
• Make recommendations, supported by well-thought-out rationale and considering various factors that could impact the recommendations.

Answer 1

SOLUTION:

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