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nikdorinn [45]
3 years ago
8

Vegas Company is considering eliminating an unprofitable segment. The segment’s fixed costs are avoidable and are less than its

contribution margin. Which of the following is a true consequence of eliminating this unprofitable segment?A.Overall net income will decrease.B.Overall fixed costs will increase.C.Overall contribution margin will increase.D.Overall variable costs will increase.
Business
2 answers:
Advocard [28]3 years ago
7 0

Answer:

A. Overall net income will decrease.

Explanation:

When the contribution margin of an unprofitable segment is less than the fixed costs, the net income of the company will increase if it eliminates that unprofitable segment.

However, it is not advisable to eliminate an unprofitable segment if its contribution margin is greater than the fixed costs, because it will be contributing to the recovery of the fixed costs it is not eliminated. But if it is eliminated, the overall net profit of the company will decrease due to the loss of contribution to the recovery of the fixed costs from the eliminated segment.

Therefore, the true consequence of eliminating the unprofitable segment by Vegas Company is that its overall net income will decrease.

Paraphin [41]3 years ago
3 0

Answer:

Option A,overall net income will decrease

Explanation:

The rule is that an unprofitable segment should be eliminated if its contribution is negative or zero.

In other words, a good justification for closing up an unprofitable segment of a business is when its contribution(sales-variable costs) is equal to or less than the fixed costs

If Vegas Company closes the unprofitable segment the overall net income will decrease because the segment's contributes to recovery of fixed costs since its contribution margin is more than its fixed costs,hence closing it brings about increased costs and reduced net income

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As the production planner for Xiangling Hu Products, Inc., you have been given a bill of material for a bracket that is made up
Klio2033 [76]
<h3>Explanation:</h3><h3>Part (a):</h3>

Solved part is attached as an image.

<h3>Part (b):</h3>

Let us first determine the amount required of each item to produce 1 bracket.

From the attached diagram, we can see that to manufacture 1 bracket, quantity of each item needed is,

Base = 1

Spring = 2

Clamp = 1 + 4 = 5

Housing = 2

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Casting = (1 * 1) + (4 * 1) = 5

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Shaft = 2 * 1 = 2

Hence, for 50 Brackets, quantity of each item required will be,

Base = 1 * 50 = 50

Spring = 2 * 50 = 100

Clamp = 5 * 50 = 250

Housing = 2 * 50 = 100

Handle = 5 * 50 = 250

Casting = 5  * 50 = 250

Bearing = 4 * 50 = 200

Shaft = 2 * 50 = 100

<em>NOTE: The above quantities give exclusive quantities required for each item. In actual practice, we won't have to purchase base, clamp & housing separately as the will be assembled from their components which are already procured.</em>

<h3>Part (c):</h3>

As 25 bases are already in stock, parts for them will not be needed. I will refer the quantities subtracted due to this by indicating (B). Similarly, quantities subtracted due to clamps will be indicated as (C).

Base = 50 - 25 = 25

Spring = 50

Clamp = 250 - 100 - 25(B) = 125

Housing = 100 - (2*25)(B) = 50

Handle = 1 * 125 = 125

Casting = 1 * 125 = 125

Bearing = 2 * 50 = 100

Shaft = 1 * 50 = 50

6 0
3 years ago
Gordon Company reports the following information at the current fiscal year end of December 31: Common Stock, $0.10 par value pe
telo118 [61]

Answer:

$0.71

Explanation:

Calculation to determine What was the average selling price for the common stock issued

Using this formula

Common stock issued avarage selling price=

Paid-in Capital in Excess of Par-Common÷Common Stock par value per share

Let plug in the formula

Common stock issued avarage selling price=($600,000+$98,000)/($98,000÷$0.10)

Common stock issued avarage selling price=$698,000/$980,000

Common stock issued avarage selling price=$0.71

Therefore the average selling price for the common stock issued is $0.71

3 0
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Answer:

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