149.Corn Crunchers has three product lines. Its only unprofitable line is Corn Nuts, the resultsof which appear below for 2008:Sales$700,000Variable expenses460,000Fixed expenses300,000Net loss$ (60,000)If this product line is eliminated, 30% of the fixed expenses can be eliminated. How muchare the relevant costsin the decision to eliminate this product line?a.$90,000b.$760,000c.$670,000d.$550,000Variable expenses460,000Fixed expenses (30% eliminated)90,000Relevant Costs$550,000150.North Division has the following information:Sales$900,000Variable expenses480,000Fixed expenses465,000If this division is eliminated, the fixed expenses will be allocated to the company’s otherdivisions. What is the incremental effect on net income if the division is dropped?
151.A product line should be eliminated whenever152.When will the elimination of a product line have no effect on the company’s overall profit?Use the following information for questions 153-156.Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. Acondensed segmented income statement for a recent period follows:Wood AluminumHard RubberTotalSales$500,000$200,000$ 65,000$765,000Variable expenses325,000140,00058,000 523,000Contribution margin175,00060,0007,000242,000Fixed expenses75,00035,00022,000 132,000Net income (loss)$100,000$ 25,000$(15,000)$110,000153.Assume none of the fixed expenses for the hard rubber line are avoidable. What will betotal net income if the line is dropped?a.$125,000b.$103,000c.$105,000d.$140,000154.Assume all of the fixed expenses for the hard rubber line are avoidable. What will be totalnet income if that line is dropped?155.What would have to occur for total net income to remain unchanged when the hard rubberline is dropped?
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