Solved

The Management Accountant for the Chocolate S'more Company Has Prepared

Question 184

Essay

The management accountant for the Chocolate S'more Company has prepared the following income statement for the most current year:
 Chocolate  other Candy  Fudge  Total  Sales $40,000$25,000$35,000$100,000 Cost of goods sold 26,00015,00019,00060,000 Contribution margin 14,00010,00016,00040,000 Delivery and ordering costs 2,0003,0002,0007,000 Rent (per sq. foot used) 3,0003,0002,0008,000 Allocated corporate costs 5,0005,0005,00015,000 Corporate profit $4,000$(1,000)$7,000$10,000\begin{array}{lrrrr}&\text { Chocolate }&\text { other Candy }&\text { Fudge }&\text { Total }\\\text { Sales } & \$ 40,000 & \$ 25,000 & \$ 35,000 & \$ 100,000 \\\text { Cost of goods sold } & 26,000 & 15,000 & 19,000 & 60,000 \\\text { Contribution margin } & 14,000 & 10,000 & 16,000 & 40,000 \\\text { Delivery and ordering costs } & 2,000 & 3,000 & 2,000 & 7,000\\\text { Rent (per sq. foot used) } & 3,000 & 3,000 & 2,000 & 8,000 \\\text { Allocated corporate costs } & 5,000 & 5,000 & 5,000 & 15,000 \\\text { Corporate profit } & \$ 4,000 & \$(1,000) & \$ 7,000 & \$ 10,000\end{array} a.Do you recommend discontinuing the Other Candy product line? Why or why not?
b.If the Chocolate product line had been discontinued,corporate profits for the current year would have decreased by what amount?

Correct Answer:

verifed

Verified

a.No,I would not recommend discontinuing...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents