Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply's business segments. $\begin{array}{lrrr}&\text { ReceptionSunplies}&\text { BridaL Dresses}&\text { EloraL Decorations }\
\text { Sales } & \$ 160,000 & \$ 110,000 & \$ 210,000 \
\text { Variable costs } & 84,000 & 50,000 & 120,000 \
\hline \text { Contribution margin } & 76,000 & 60,000 & 90,000 \
\text { Direct fixed costs } & 50,000 & 20,000 & 25,000 \
\text { Allocated common fixed costs } & 30,000 & 25,000 & 30,000 \\text { Net income }&(\$4,000)&\$15,000&\$35,000
\end{array}$ If reception supplies are dropped, floral decorations sales are expected to increase by 20%. What impact will the increase in floral decorations have on overall profitability?

Question

Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply's business segments. $\begin{array}{lrrr}&\text { ReceptionSunplies}&\text {  BridaL Dresses}&\text {  EloraL Decorations }\
\text { Sales } & \$ 160,000 & \$ 110,000 & \$ 210,000 \
\text { Variable costs } & 84,000 & 50,000 & 120,000 \
\hline \text { Contribution margin } & 76,000 & 60,000 & 90,000 \
\text { Direct fixed costs } & 50,000 & 20,000 & 25,000 \
\text { Allocated common fixed costs } & 30,000 & 25,000 & 30,000 \\text { Net income }&(\$4,000)&\$15,000&\$35,000
\end{array}$ If reception supplies are dropped, floral decorations sales are expected to increase by 20%. What impact will the increase in floral decorations have on overall profitability?

Quizplus · Accepted Answer

The Answer of Wedding Supply is trying to decide whether or not to continue distributing reception supplies. The following information is available for Wedding Supply's business segments. $\begin{array}{lrrr}&\text { ReceptionSunplies}&\text {  BridaL Dresses}&\text {  EloraL Decorations }\
\text { Sales } & \$ 160,000 & \$ 110,000 & \$ 210,000 \
\text { Variable costs } & 84,000 & 50,000 & 120,000 \
\hline \text { Contribution margin } & 76,000 & 60,000 & 90,000 \
\text { Direct fixed costs } & 50,000 & 20,000 & 25,000 \
\text { Allocated common fixed costs } & 30,000 & 25,000 & 30,000 \\text { Net income }&(\$4,000)&\$15,000&\$35,000
\end{array}$ If reception supplies are dropped, floral decorations sales are expected to increase by 20%. What impact will the increase in floral decorations have on overall profitability?

Wedding Supply Is Trying to Decide Whether or Not to Continue