OK Salsa Corporation manufactures four flavors of salsa. Last year, OK Salsa generated net operating...
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OK Salsa Corporation manufactures four flavors of salsa. Last year, OK Salsa 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 Atomic $(2,000) ... $45,000.... $35,000..... $162,000 $(16,000) ... $(5,000)...... $7,000 ....... $94,000 Contribution margin Segment margin Allocated common fixed expenses... Segment margin less allocated common fixed expenses $10,000 ... $10,000.... $10,000 ....... $10,000 $ (26,000) . $(15,000).... $(3,000)....... $84,000 OK Salsa expects similar operating results for the upcoming year. If OK Salsa want maximize its profitability in the upcoming year, which flavor or flavors should OK Salsa discontinue? Wimpy, Mild, and Medium. no flavors should be discontinued. All favors should be discontinued. O Wimpy and Mild. O Wimpy
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