ch12-AFM102s2012

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Unformatted text preview: ation be available to prepare detailed income statements for both alternatives. 2. Mingling irrelevant costs with relevant costs may cause confusion and distract attention away from the information that is really critical. Managerial Accounting 12-7 Adding/Dropping Segments Due to the declining popularity of digital watches, Due to the declining popularity of digital watches, Lovell Company’s digital watch line has not reported Lovell Company’s digital watch line has not reported a profit for several years. Lovell is considering a profit for several years. Lovell is considering dropping this product line. dropping this product line. DECISION RULE DECISION RULE Lovell should drop the digital watch segment only if its Lovell should drop the digital watch segment only if its profit would increase. This would only happen if the profit would increase. This would only happen if the ffixed cost savings exceed tthe lost contribution margin. ixed cost savings exceed he lost contribution margin. Managerial Accounting 12-8...
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This test prep was uploaded on 04/09/2014 for the course AFM 102 at Waterloo.

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