Problem 8-29 (Part Level Submission) Crane Toys’ management is considering elimi
ID: 2546679 • Letter: P
Question
Problem 8-29 (Part Level Submission) Crane Toys’ management is considering eliminating product A, which has been showing a loss for several years. The company’s annual income statement, is as follows:
Total $2,289,000 $1,405,000 $1,807,800 $5,501,800 601,800 1,085,100 3,303,900 $672,000 $803,200 $722,700 $2,197,900 $600,000 $427,000 $520,000 $1,547,000 47,200 276,100 $707,300 $517,300 $645,700 $1,870,300 $(35,300)$285,900 $77,000$327,600 Sales Variable expenses 1,617,000 Contribution margin Advertising expense Depreciation expense 16,900 90,400 10,200 80,100 20,100 105,600 Corporate expenses Total fixed expenses Operating income Advertising expense Specific to each product. Depreciation expense Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees. Restate the income statement in segment margin format. TotalExplanation / Answer
Particulars A B C Total Sales 2289000 1405000 1807800 5501800 Less: Variable Expenses 1617000 601800 1085100 3303900 Contribution Margin 672000 803200 722700 2197900 Less: Tracable Fixed Costs: Advertising Expenses 600000 427000 520000 1547000 Costs Directly Traceable to Products Depreciation Expenses 16900 10200 20100 47200 Costs Directly Traceable to Products Product Line Margin 55100 366000 182600 603700 Less: Common Costs 276100 Corporate Expense Net Operating Income 327600