Does daltons operational performance increase if they drop

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Dalton corporation is analyzing product line feasibility. They allocate corporate overhead of $1,800 based on Labor dollars. The president believes he can increase corporate performance by eliminating unprofitable products.

 

Product A

Product B

Product C

Product D

Net Sales

1,100

800

1,250

1,500

Direct Labor

(500)

(600)

(400)

(600)

Direct Materials

(150)

(300)

(125)

(150)

a. Prepare a Contribution Margin Income statement based on all four products and determine if any product lines should be dropped.

b. Prepare a Contribution Margin Income statement to show that what would happen if Dalton does drop a product line.

c. Does Dalton's operational performance increase if they drop a product line?

d. Should Dalton drop their unprofitable product lines?

e. What is this an example of?

Reference no: EM131227875

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