Biology Forums - Study Force

Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount):

	Wimpy	Mild	Medium	Hot	Atomic
Contribution margin	$(2,000)	$45,000	$35,000	$50,000	$162,000
Segment margin	$(16,000)	$(5,000)	$7,000	$10,000	$94,000
Allocated common fixed expenses	$10,000	$10,000	$10,000	$10,000	$10,000
Segment margin less allocated common fixed expenses	$(26,000)	$(15,000)	$(3,000)	$ 0	$84,000

Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue?

▸ no flavors should be discontinued

▸ Wimpy

▸ Wimpy and Mild

▸ Wimpy, Mild, and Medium

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