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Omdat Google Doc X > Handout Problem 11.pdf nile php/440352/mod resource/content/7/HandoutN20Problem.2011.pdf West Virginia Ski Company is presently producing at 80% of capacity. However, it has come to the president's attention that one of its product lines, cross country skis, is showing an operating loss. Therefore, he is considering the possibility of dropping the line in order to improve profitability. Current information concerning ski production is provided below. WEST VIRGINIA SKI COMPANY REVENUE AND COST DATA FOR CURRENT COMPANY PRODUCT LINES Downhill Cross Regular Racing Country Downhill Skis Skis Skis Sales Revenue S 34,000 44,000 54,000 Variable Costs 23,500 39,400 42,000 Contribution Margin 10,500 4,600 12,000 Fixed Costs Allocated To Product Line 3,200 6,000 7.400 Operating Profit (Loss) 5.300 1.400) S 4,600 If the company drops the cross country ski line, the sales revenue associated with that live would be lost. However, the variable costs related to this line would be saved and fixed costs for the company would decrease by 20% REQUIRED: Prepare an analysis to show whether the company should drop the cross country ski product line Be sure to show all relevant computations M acer Omdat Google Doc X > Handout Problem 11.pdf nile php/440352/mod resource/content/7/HandoutN20Problem.2011.pdf West Virginia Ski Company is presently producing at 80% of capacity. However, it has come to the president's attention that one of its product lines, cross country skis, is showing an operating loss. Therefore, he is considering the possibility of dropping the line in order to improve profitability. Current information concerning ski production is provided below. WEST VIRGINIA SKI COMPANY REVENUE AND COST DATA FOR CURRENT COMPANY PRODUCT LINES Downhill Cross Regular Racing Country Downhill Skis Skis Skis Sales Revenue S 34,000 44,000 54,000 Variable Costs 23,500 39,400 42,000 Contribution Margin 10,500 4,600 12,000 Fixed Costs Allocated To Product Line 3,200 6,000 7.400 Operating Profit (Loss) 5.300 1.400) S 4,600 If the company drops the cross country ski line, the sales revenue associated with that live would be lost. However, the variable costs related to this line would be saved and fixed costs for the company would decrease by 20% REQUIRED: Prepare an analysis to show whether the company should drop the cross country ski product line Be sure to show all relevant computations M acer

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