Reference no: EM133062026
Question 1 - Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supply's business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated, but will be allocated to the two remaining segments.
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Costumes
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Party Supplies
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Floral Decorations
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Sales
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$160,000
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$110,000
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$210,000
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Variable costs
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84,000
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50,000
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120,000
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Contribution margin
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76,000
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60,000
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90,000
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Direct fixed costs
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50,000
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20,000
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25,000
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Allocated common fixed costs
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30,000
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25,000
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30,000
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Net income
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$(4,000)
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$15,000
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$35,000
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Required - If costumes are dropped, what change will occur to profit? If the effect is negative, use a dash - not parentheses ( ).
Question 2 - Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supply's business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated, but will be allocated to the two remaining segments.
|
|
Costumes
|
Party Supplies
|
Floral Decorations
|
|
Sales
|
$160,000
|
$110,000
|
$210,000
|
|
Variable costs
|
84,000
|
50,000
|
120,000
|
|
Contribution margin
|
76,000
|
60,000
|
90,000
|
|
Direct fixed costs
|
50,000
|
20,000
|
25,000
|
|
Allocated common fixed costs
|
30,000
|
25,000
|
30,000
|
|
Net income
|
$(4,000)
|
$15,000
|
$35,000
|
Required - Should Party Supply drop the Costumes segment or keep it? Drop the costumes segment or keep?
Question 3 - Underground Food Store has 4,000 pounds of raw beef nearing its expiration date. Each pound has a cost of $4.50. The beef could be sold "as is" for $3.00 per pound to the dog food processing plant, or roasted and sold in the deli. The cost of roasting the beef will be $2.80 per pound, and each pound could be sold for $6.50.
Required - What is the gross profit/loss per pound if the raw beef is sold "as is" to the dog food processing plant? If it is negative, use a dash - not parentheses ( ).
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