Sherpa Company manufactures tents and sleeping bags. Tents are priced at $80, have variable costs of $55, and have direct fixed costs of $120,000. Sleeping bags are priced at $60, have variable costs of $35, and have direct fixed costs of $66,000. Common fixed costs equal $200,000. Last year, the division sold 5,000 tents and 10,000 sleeping bags.
Required:
A. What was the segment margin for tents last year?
B. What was the segment margin for sleeping bags last year?
C. What was Sherpa's operating income last year?
D. If Sherpa stopped making tents, what would operating income be?

Question

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The Answer of Sherpa Company manufactures tents and sleeping bags. Tents are priced at $80, have variable costs of $55, and have direct fixed costs of $120,000. Sleeping bags are priced at $60, have variable costs of $35, and have direct fixed costs of $66,000. Common fixed costs equal $200,000. Last year, the division sold 5,000 tents and 10,000 sleeping bags.
Required:
A. What was the segment margin for tents last year?
B. What was the segment margin for sleeping bags last year?
C. What was Sherpa's operating income last year?
D. If Sherpa stopped making tents, what would operating income be?

Sherpa Company Manufactures Tents and Sleeping Bags