1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
NNADVOKAT [17]
3 years ago
15

Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The

following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount):
Wimpy Mild Medium Hot Atomic
Contribution margin $(2000) $45,000 $35,000 $50,000 $162,000
Segment margin $(16,000) $(5000) $7000 $10,000 $94,000
Segment margin less allocated common fixed expenses
$(26,000) $(15,000) $(3000) $0 $84,000

Toxemia expects similar operating results for the upcoming year.
If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue?
Business
1 answer:
Rudiy273 years ago
6 0

Answer:

We should discontinue Wimpy and we will be saving $2,000 as addition to the Net Margin.

Fixed Expenses will be incurred whether we produce or not, thus the deciding factor is a segment being able to generate a positive Contribution Margin.

By discontinuing Wimpy the allocated Fixed Expense will go up to $12,500 Per active unit from $10,000. Although Wimpy will yet retain its Fixed Expense.

Explanation:

Toxemia Salsa Corporation

<u>Segment Review</u>

A.

Wimpy

Contribution Margin = -$2,000

Less Fixed Expense = -$14,000

Segment Margin = -$16,000

Less Allocated Fixed Expense = -$10,000

Net Segment Margin = -$26,000

B.

Mild

Contribution Margin = $45,000

Less Fixed Expense = -$50,000

Segment Margin = -$5,000

Less Allocated Fixed Expense = -$10,000

Net Segment Margin = -$15,000

C.

Medium

Contribution Margin = $35,000

Less Fixed Expense = -$28,000

Segment Margin = $7,000

Less Allocated Fixed Expense = -$10,000

Net Segment Margin = -$3,000

D.

Hot

Contribution Margin = $50,000

Less Fixed Expense = -$40,000

Segment Margin = $10,000

Less Allocated Fixed Expense = -$10,000

Net Segment Margin = -$0

E.

Hot

Contribution Margin = $162,000

Less Fixed Expense = -$68,000

Segment Margin = $94,000

Less Allocated Fixed Expense = -$10,000

Net Segment Margin = -$84,000

F.

Total of flavors

Contribution Margin = $290,000

Less Fixed Expense = -$200,000

Segment Margin = $90,000

Less Allocated Fixed Expense = -$50,000

Net Segment Margin = $40,000

<u>Benchmark of Flavors</u>

If we stop to produce Wimpy we would save $2,000 assuming we will yet incur the segment Fixed Expense of $14,000 in any case (decision: Discontinue)

If we stop to produce Mild we would lose $45,000 assuming we will yet incur the segment Fixed Expense of $50,000 in any case (decision: Continue)

If we stop to produce Medium we would lose $35,000 assuming we will yet incur the segment Fixed Expense of $28,000 in any case (decision: Continue)

If we stop to produce Hot we would lose $50,000 assuming we will yet incur the segment Fixed Expense of $40,000 in any case (decision: Continue)

If we stop to produce Atomic we would lose $162,000 assuming we will yet incur the segment Fixed Expense of $68,000 in any case (decision: Continue)

You might be interested in
Bedrock Company reported a December 31 ending inventory balance of $412,500. The following additional information is also availa
belka [17]

Answer:

The correct Ending Balance = $ 390300

Explanation:

Ending Balance of inventory = $ 412500

Less Office Supplies   = $22,200

The correct Ending Balance = $ 390300

Goods already cosigned are the consignor's inventory unless they are sold. They are not included in the consignee's inventory. So they will be included in the ending inventory.The office Supplies are not the inventory goods. They are daily expense goods and are not included in the inventory.

3 0
3 years ago
Read 2 more answers
On June 2nd, SEAkayak had the following details for its common stock: 1,000,000 shares authorized, 400,000 shares issued, and 40
kompoz [17]

Answer:

The authorized common stock shares remain 1,000,000 shares.

Explanation:

The authorized shares are not affected by movements in the shares, like issue of shares, repurchase, and resale of treasury stock shares.  The authorized shares, therefore, represent the number of shares that the company is legally bound to issue without exceeding.  The implication is that the company is free to issue shares less than or equal to the authorized shares, but it may not issue more than the authorized until it obtains a new authorization.

The movements are accounted for in separate accounts called Issued Common Stock Account and Treasury Stock Account.  The treasury stock account is a contra account to the Common Stock.

3 0
2 years ago
Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to proudcts. Mnaufacturing over
tatyana61 [14]

Answer:

2040.

Explanation:

To reach the total manufacturing cost we need to calculate machining and assembling overhead rate first, in order to calculate the rate we need to divide manufacturing overhead cost on number of hours

Machining OH rate = 280000 / 50000 = 5.60  

Assembling OH rate = 360000/40000 = 9.00

 

manufacturing cost:    

                    machine Assembly Total  

Material  425                175             600  

labor               275                300             575  

Overhead                                                 865  

(50*5.60)       280

(65*9)             585            

Total cost                                               2040  

5 0
3 years ago
When a local walmart is open 7 days a​ week, 24 hours a​ day, which form of utility is it providing to​ customers?
Vladimir [108]
Answer: TIME UTILITY

When a local Walmart is open 7 days a week, 24 hours a day, it is providing the customers with time utility. Economic utility includes Form utility, Time utility, Place utility and Possession utility. Time utility refers to the availability of products when the customer needs them. In this utility, the company chooses the hours and days when products and services are available to the customers according to the needs of the customers.
6 0
3 years ago
You have just taken over your family’s printing business. It is important to you that the business has a positive impact on your
Nimfa-mama [501]

Answer:

a. Some of your printing processes utilize chemicals that require press operators to wear masks during production.<u> </u><u>Health and safety risks.</u>

Those chemicals present a health and safety risk because a person can get sick if they do not wear the masks.

b. Because of increased profits in the last 5 years, you have been able to increase staffing levels by 25%. <u>Increase employment.</u>

<u></u>

c. The business is a member of the local Chamber of Commerce and supports local community charities. <u>Improve the quality of life</u>

The business supports local charities which shows that it aims to improve the quality of life.

<u></u>

d. The business is the only one in town to offer 48-hour turnaround on printing projects. <u>Offer valuable products</u>

The business is the only one offering this service so it is offering valuable services.

<u></u>

e. The business uses ink that is shipped in bulky, non-recyclable ink containers. <u>Environment damage</u>

Ink is bulky and containers are non-recyclable. This will cause environmental damage.

5 0
3 years ago
Other questions:
  • International Imports (I2) pays an annual dividend rate of 10.20% on its preferred stock that currently returns 13.67% and has a
    10·1 answer
  • In the past, how have you approached problems that you received with little or inadequate instruction/guidance?
    8·2 answers
  • Kragle Corporation reported the following financial data for one of its divisions for the year; average invested assets of $470,
    13·1 answer
  • When delivering bad news to customers, use an indirect strategy as you would with other bad news messages, and maintain a positi
    6·1 answer
  • Evan McWilliams was involved in a two-car accident with Francis Sullivan. It was Evan's fault and Francis was seriously injured
    6·1 answer
  • On June 10, Sheridan Company purchased $7,700 of merchandise from Crane Company, terms 3/10, n/30. Sheridan Company pays the fre
    12·1 answer
  • What are three reasons to study economics?
    14·1 answer
  • Most Company has an opportunity to invest in one of two new projects. Project Y requires a $310,000 investment for new machinery
    11·1 answer
  • Melinda, who works in a jewelry store owned by Cindy, was picking up some gem stones for use in the store. On the way back to th
    14·1 answer
  • monopolistically competitive firms are unable to produce enough output to reach the average total cost because of the presence o
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!