Giving below information for the most current year: Big Small Medium &n
- Giving below information for the most current year:
Big Small Medium Total
Sales $60,000 $100,000 $40,000 $200,000
Cost of goods sold 36,000 65,000 20,000 121,000
Contribution margin 24,000 35,000 20,000 79,000
Order and delivery processing 18,000 21,000 8,000 47,000
Rent (per sq. foot used) 2,000 1,000 3,000 6,000
Allocated corporate costs 7,000 7,000 7,000 21,000
Corporate profit $ (3,000) $ 6,000 $ 2,000 $ 5,000
- If the Big Department is discontinue, the company will have report profit of?
- If Medium is discontinue, the net profit of the company will be?
Homework Answers
Rent per sq. foot used is an allocated cost and not a direct cost. Unavoidable costs are Rent and allocated corporate costs
a.
| Big Department | |
| Contribution margin lost | ($24,000) |
| Savings from avoidable fixed costs : | |
| Order and delivery processing | $18,000 |
| Reduction in profit | ($6,000) |
Company profit = $5,000 - $6,000 = ($1,000)
b.
| Medium Department | |
| Contribution margin lost | ($20,000) |
| Savings from avoidable fixed costs : | |
| Order and delivery processing | $8,000 |
| Reduction in profit | ($12,000) |
Company profit = $5,000 - $12,000 = ($7,000)
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Giving below information for the most current year:
Big
Small
Medium
&n
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