Hickory Company’s three wooden flooring product

Published on March 2017 | Categories: Business/Law | Downloads: 58 | Comments: 0 | Views: 244
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Hickory Company’s three wooden flooring product Click Link Below To Buy: http://hwcampus.com/shop/hickory-companys-three-wooden-flooring-product/ Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales Revenue $440,000 $200,000 $300,000 $900,000 Less: Variable Exps 225,000 120,000 250,000 595,000 Contribution Margin 175,000 80,000 50,000 305,000 Less direct fixed expenses: Machine rent (5,000) (20,000) (50,000) (75,000) Supervision (15,000) (10,000) (20,000) (45,000) Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 40,000 (45,000) 115,000 Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000). All variable costs are relevant. Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. 1. Which alternative is more cost effective? Drop the parquet flooring line. 2. By how much? $____?

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Hickory Company’s three wooden flooring product Click Link Below To Buy: http://hwcampus.com/shop/hickory-companys-three-wooden-flooring-product/ Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales Revenue $440,000 $200,000 $300,000 $900,000 Less: Variable Exps 225,000 120,000 250,000 595,000 Contribution Margin 175,000 80,000 50,000 305,000 Less direct fixed expenses: Machine rent (5,000) (20,000) (50,000) (75,000) Supervision (15,000) (10,000) (20,000) (45,000) Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 40,000 (45,000) 115,000 Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000). All variable costs are relevant. Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. 1. Which alternative is more cost effective? Drop the parquet flooring line. 2. By how much? $____?

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