Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. structuring a keep-or-drop product line problem sh

Structuring a Keep-or-Drop Product Line Problem Shown below is a segmented income statement for Hickory...

50.1K

Verified Solution

Question

Accounting

Structuring a Keep-or-Drop Product Line Problem Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses: Machine rent (5,000) (20,000) (50,000) (75,000) Supervision (15,000) (10,000) (20,000) (45,000) Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (45,000) $115,000 Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000). All variable costs are relevant. Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. Required: 1. List the alternatives being considered with respect to the parquet flooring line. 2. List the relevant benefits and costs for keeping the parquet flooring line? 3. Which alternative is more cost effective? By how much? $

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Advance Math
1.2K views

Obtain the general solution of the following equation 4Uxx+12Uxy+9Uyy-9U = 9

Biology
1.2K views

What is the purpose of notifications? They are sounds that apps use as advertisements to...

Basic Math
1.2K views

An amusement park is holding a contest for people who are in line before 7...

Algebra
1.2K views

Solve the initial value problemy" + 6y' + 13y = 0;y(0) = 2, ...

Algebra
1.2K views

Indicate whether the following statement is true or false ab ab6 Choose the correct answer...

Accounting
1.2K views

Exercises 15-27 Fixed Overhead Rate; Denominator Level; Two-Variance Breakdown of Total Factory Overhead Cost Variance...

Accounting
1.2K views

Table 3 Operating Expenses Salaries and Wages Employee Benefits Supply Expense - da Vinci Supply...

Accounting
1.2K views

En enero de 2010, Yoder Corporation compr una mina de mineral por $3,400,000 con mineral...

Accounting
1.2K views

VitaPup produces a vitamin-enhanced dog food. The company expects sales to be 12,600 bags in...

Accounting
1.2K views

Estonated cait purments budoet \begin{tabular}{|c|c|c|c|} \hline & Bomuary & February & March \\ \hline 5Wvies...

Finance
1.2K views

The following information was available as of the close of business June 1, 20XX, on...

Accounting
1.2K views

Imperial Jewelers manufactures and sells a gold bracelet for $403.00. The company's accounting system says...