Licnep Ltd. has three major product lines, soda, juice and ice cream. Licnep is considering...
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Accounting
Licnep Ltd. has three major product lines, soda, juice and ice cream. Licnep is considering discontinuing producing ice cream because the divisional income statement indicates it is being sold at a loss. The most recent annual income statement is outlined below: have t Soda Juice Ice Cream (000s) (000s) , Sales (000s) $48.330 $44.980 $26,230 Variable costs Fixed costs 16,500 19.600 12,700 21,800 24,400 18,300 Operating income $10,030 $980 ($4,770) The fixed costs include fixed costs directly attributable to each product line as well as allocated common costs. The portion of directly attributable fixed costs included in total fixed costs is 40% for soda, 75% for juice and 55% for ice cream.
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