Macaulay Company has three product lines-D,E,and F.The following information is available:
$$\begin{array} { | l | l | l | l | }
\hline & \text { D } & { \text { E } } & { \text { F } } \
\hline \text { Sales } & \$ 90,000 & \$ 40,000 & \$ 30,000 \
\hline \text { Variable costs } & ( 30,000 ) & ( 10,000 ) & ( 11,000 ) \
\hline \text { Contribution margin } & \$ 60,000 & \$ 30,000 & 19,000 \
\hline \text { Fixed expenses } &( 10,000 ) & ( 15,000 ) & ( 25,000 ) \
\hline \text { Operating profit (loss) } & \$ 50,000 & \$ 15,000 &( \$ 6000 ) \
\hline
\end{array}$$
Macaulay Company is thinking of dropping product line F because it is reporting an operating loss.Assume that $15,000 of total fixed costs could be eliminated by dropping F.What effect would this decision have on operating profit?

Question

Macaulay Company has three product lines-D,E,and F.The following information is available:
$$\begin{array} { | l | l | l | l | } 
\hline & \text { D } & { \text { E } } &  { \text { F } } \
\hline \text { Sales } & \$ 90,000 & \$ 40,000 & \$ 30,000 \
\hline \text { Variable costs } & ( 30,000 ) & ( 10,000 ) & ( 11,000 ) \
\hline \text { Contribution margin } & \$ 60,000 & \$ 30,000 & 19,000 \
\hline \text { Fixed expenses } &( 10,000 ) & ( 15,000 ) & ( 25,000 ) \
\hline \text { Operating profit (loss) } & \$ 50,000 & \$ 15,000 &( \$ 6000 ) \
\hline
\end{array}$$
Macaulay Company is thinking of dropping product line F because it is reporting an operating loss.Assume that $15,000 of total fixed costs could be eliminated by dropping F.What effect would this decision have on operating profit?

Quizplus · Accepted Answer

The Answer of Macaulay Company has three product lines-D,E,and F.The following information is available:
$$\begin{array} { | l | l | l | l | } 
\hline & \text { D } & { \text { E } } &  { \text { F } } \
\hline \text { Sales } & \$ 90,000 & \$ 40,000 & \$ 30,000 \
\hline \text { Variable costs } & ( 30,000 ) & ( 10,000 ) & ( 11,000 ) \
\hline \text { Contribution margin } & \$ 60,000 & \$ 30,000 & 19,000 \
\hline \text { Fixed expenses } &( 10,000 ) & ( 15,000 ) & ( 25,000 ) \
\hline \text { Operating profit (loss) } & \$ 50,000 & \$ 15,000 &( \$ 6000 ) \
\hline
\end{array}$$
Macaulay Company is thinking of dropping product line F because it is reporting an operating loss.Assume that $15,000 of total fixed costs could be eliminated by dropping F.What effect would this decision have on operating profit?

Macaulay Company Has Three Product Lines-D,E,and F Macaulay Company Is Thinking of Dropping Product Line F Because