Molina medical supply company is trying to decide whether

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Reference no: EM13584813

Molina Medical Supply Company is trying to decide whether or not to continue distributing hospital supplies. The following information is available for Molina%u2019s business segments. Assume that all direct fixed costs could be avoided if a segment is dropped and that the total common fixed costs would remain unchanged if a segment is dropped.

	Hospital Supplies	Retail Stores	Mail Order
Sales	$120,000	$440,000	$360,000
Variable costs	64,000	200,000	140,000
Contribution Margin	56,000	240,000	220,000
Direct Fixed Costs	50,000	80,000	90,000
Allocated common fixed costs	20,000	70,000	60,000
Net Income	($ 14,000)	$ 90,000	$ 70,000

Reference no: EM13584813

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