The Mansfield Company manufactures and sells two lines of fishing rods. During the most recent...
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Accounting
The Mansfield Company manufactures and sells two lines of fishing rods. During the most recent accounting period, the Pro line and the Novice line sold 15,000 and 2,000 units, respectively. The company's most recent financial statements are shown below:
Pro
Novice
Sales
$
900,000
$
240,000
Less cost of goods sold:
Unit-level production cost
600,000
135,000
Depreciation, production equipment
125,000
50,000
Gross margin
$
175,000
$
55,000
Less operating expenses:
Unit-level selling and administrative costs
40,000
65,000
Corporate-level facility expenses (fixed)
36,000
36,000
Net income (loss)
$
99,000
$
(46,000
)
Based on this information, the company should:
Multiple Choice
Eliminate the Novice line because it is operating at a loss.
Keep the Novice line because it contributes $40,000 to total profitability.
Keep the Novice line because it contributes $55,000 to total profitability.
It is impossible to determine with the given information.
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