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Required: a. Assuming there are no alternative uses for Hazlett \& Family's present capacity, would you recommend dropping the Southern market? b. Prepare the forecasted annual income statement showing contribution margins by products. Do not allocate fixed costs to products. c. It is believed that a new model can be ready for sale next year if Hazlett decides to go ahead with continued research. The new product would replace HLX and can be produced by simply converting equipment presently used in producing the HLX model. This conversion will increase fixed costs by $488,000 annually. What must be the minimum annual contribution margin for the new model to make the changeover financlally feasible? Complete this question by entering your answers in the tabs below. Prepare the forecasted an Wual income statement showing contribution margins by products. Do not allocate fixed costs to products. (Enter your answers in thousands. (i.e., $,400,000 should be entered as 5,400 ).) Requilred: a. Assuming there are no alternative uses for Hazlett \& Family's present capacity, would you recommend dropping the Southern market? b. Prepare the forecasted annual income statement showing contribution margins by products. Do not allocate flxed costs to products. c. It is believed that a new model can be ready for sale next year if Hazlett decides to go ahead with continued research. The new. product would replace H-LX and can be produced by simply converting equipment presently used in producing the H.LX model. This conversion will increase fixed costs by $488,000 annually. What must be the minimum annual contribution margin for the new model to make the changeover financially feasible? Complete this question by entering your answers in the tabs below. It is believed that a new model can be ready for sale next year if Hazlett decides to go ahead with continued research. The new product would replace H-LX and can be produced by simply converting equipment presently used in producing the H-LX model. This conversion will increase fixed costs by $488,000 annually. What must be the minimum annual contribution margin for the new model to make the changeover finandally feasible? (Enter your answer th thousands. (i.e., 5, 400,000 should be entered as 5,400), ) Required: a. Assuming there are no alternative uses for Hazlett \& Family's present capacity, would you recommend dropping the Southern market? b. Prepare the forecasted annual income statement showing contribution margins by products. Do not allocate fxed costs to products. c. It is believed that a new model can be ready for sale next year if Hazlett decides to go ahead with continued research. The new product would replace HLX and can be produced by simply converting equipment presently used in producing the HLX model. This converslon will increase fixed costs by $488.000 annually. What must be the minimum annual contribution margin for the new model to make the changeover financially feasible? Complete this question by entering your answers in the tabs below. Assuming there are no alternative uses for Hazlett \& Familys present capacty, would you recommend dropping the Southem market? Problem 4-65 (Algo) Decision Whether to Add or Drop (LO 4-4) Hazlett \& Family is organized into two geographic markets Northern and Southern. The company makes an off-road vehicle for recreation and agricultural use. The vehicle is sold in three models, depending on the power and options. The three models, from least expensive to most expensive, are the HL,HLX, and HL XS. The company's financial staff has prepared the following forecasted Income statement for the upcoming fiscal year (in thousands of dollars) anagement has expressed special concern with the Southern market because of the extremely poor return on sales. This market us entered a year ago because it seemed like the best opportunity for growth. Hazlett \& Family knew that it would take some time to bulild profitability in the market, but there has been no noticeable change in the low returns over time. The financlal staff has also prepared product-line information to help the managers of the company decide whether to leave the Southern market. Sales revenue by market and product are as follows (in thousands of doitars) Marketing costs that are not listed as varlable are flxed for the period and separable by market. Fixed marketing costs assigned to the Southern market would be saved if that market were eliminated. Eliminating the Southorn market will not affect administrative costs or foced monufocturing costs. Required: a. Assuming there are no altemative uses for Hazlett \& Familys present capacity, would you recommond dropping the Southiem market? b. Prepare the forecasted annual income statement showing contribution margins by products, Do not allocate fixed costs to products. c. It is belleved that a new model can be ready for sale next year if Hazlett docides to go ahoad with continued research, The new

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