Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement,...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Keep-or-Drop Decision
Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:
Alanson
Boyne
Conway
Total
Sales revenue
$1,280
$185
$375
$1,840
Less: Variable expenses
1,115
45
300
1,460
Contribution margin
$165
$140
$75
$380
Less direct fixed expenses:
Depreciation
50
15
15
80
Salaries
95
85
80
260
Segment margin
$20
$40
$(20)
$40
Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.
Assume that each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped.
Required:
Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15". Increase $___________
Should Petoskey keep or drop Conway? Drop
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
