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Dafna1 [17]
3 years ago
13

Westfall Watches has two product​ lines: Luxury watches and Sporty watches. Income statement data for the most recent year​ foll

ow: Total Luxury Sporty Sales revenue ​$490,000 ​$360,000 ​$130,000 Variable expenses 353 comma 000 ​235,000 118 comma 000 Contribution margin 137 comma 000 ​125,000 12 comma 000 Fixed expenses ​76,000 ​38,000 ​38,000 Operating income​ (loss) $ 61 comma 000 ​$87,000 $( 26 comma 000 ) Assuming fixed costs remain​ unchanged, how would discontinuing the Sporty line affect operating​ income?
Business
1 answer:
LenaWriter [7]3 years ago
6 0

Answer:

New operating income= -$38,000

Explanation:

Giving the following information:

Sporty

Sales revenue= $130,000

Variable expenses= ($118,000)

Contribution margin= 12,000

Fixed expenses= (​38,000)

Operating income​= (26,000)

The general rule is that as long as the contribution margin is positive, in the short term the product line should continue. We will prove this.

Because none of the fixed costs are evitable, the effect on income will be the increase in the influence of the fixed costs on income.

Effect on income= -positive contribution margin

Effect on income= -$12,000

New operating income= -26,000 - 12,000= -$38,000

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6 0
2 years ago
We made a distinction between pro-business policies and pro-market policies. Which of the following is a way to put that distinc
Step2247 [10]

Answer:

<u><em>The correct answer is: </em></u> Pro-market policies mean businesses can earn profit and loss; pro-business policies means businesses only make profit.

Explanation:

Pro-market policies are those that establish norms that help the free market to operate in balance, without any kind of benefit in favor of a specific company, in this way it benefits both companies and consumers, therefore it sets up in a normal market situation where companies cannot make profits and losses.

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6 0
3 years ago
The budget components for Park Company for the quarter ended June 30 appear below. Park sells trash cans for $12 each. Budgeted
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Answer:

$96,000

Explanation:

Production  26,000 units

<u>Materials Purchase Budget</u>

Production Materials Required  (5×26,000 units)     130,000

Add Budgeted Closing Materials (50,000×20%×5)   50,000

Total Materials                                                             180,000

Less Budgeted Opening Inventory (4,000×5)          (20,000)

Budgeted Materials                                                     160,000

Material Cost per pound                                                $0.60

Total Material Cost                                                      $96,000

Therefore, the materials purchases budget will be for the month ending April 30 will be  $96,000.

7 0
3 years ago
Question 1 of 10
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Answer:

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2 years ago
High SchoolBusiness 5 points
lidiya [134]

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7 0
3 years ago
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