Chapter 11 InClass Exercises

Chapter 11 InClass Exercises - Chapter 11 - Relevant Costs...

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In-Class Exercises Adding and Dropping Product Lines and Other Segments Due to the declining popularity of digital watches, Sweiz Company’s digital watch line has not reported a profit for several years. An income statement for last year follows: Segment Income Statement—Digital Watches Sales $ 500,000 Less variable expenses: Variable manufacturing costs $120,000 Variable shipping costs 5,000 Commissions 75,000 200,000 Contribution margin 300,000 Less fixed expenses: General factory overhead* 60,000 Salary of product line manager 90,000 Depreciation of equipment** 50,000 Product line advertising 100,000 Rent—factory space*** 70,000 General administrative expense* 30,000 400,000 Net operating loss $(100,000 ) * Allocated common costs that would be redistributed to other product lines if digital watches were dropped. ** This equipment has no resale value and does not wear out through use. *** The digital watches are manufactured in their own facility.
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This note was uploaded on 02/14/2011 for the course ACCT 226 taught by Professor Smith during the Spring '10 term at South Carolina.

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Chapter 11 InClass Exercises - Chapter 11 - Relevant Costs...

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