V. When Mr. Ding L. Berry, president and chief executive of Berry, Inc., first saw...
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V. When Mr. Ding L. Berry, president and chief executive of Berry, Inc., first saw the segmented income statement below, he flew into his usual rage: "When will we ever start showing a real profit? I'm starting immediate steps to eliminate those two unprofitable lines!" Product Lines Total U V W Sales $250,000 $100,000 $75,000 $75,000 Variable expenses 119,000 37.000 35,000 47,000 Contribution margin. 131,000 63,000 40,000 28,000 Traceable fixed expenses* 98,000 31,000 37,000 30,000 Common expenses, allocated. 32.900 18,000 10,500 4,400 Net operating income (loss)... $ 100 $ 14,000 $(7,500) $(6,400) *These traceable expenses could be eliminated if the product lines to which they are traced were discontinued. Required: (10 pts.) Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer.|
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