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dxpayne dxpayne
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6 years ago
The management accountant for the Chocolate S'more Company has prepared the following income statement for the most current year:

   Chocolate   Other Candy   Fudge   Total
Sales   $40,000   $25,000   $35,000   $100,000
Cost of goods sold   26,000   15,000   19,000   60,000
Contribution margin   $14,000   $10,000   $16,000   $40,000
Delivery and ordering costs   2,000   3,000   2,000   7,000
Rent (per sq. metre used*)   3,000   3,000   2,000   8,000
Allocated corporate costs   5,000   5,000   5,000   15,000
Corporate profit   $4,000   $(1,000)   $7,000   $10,000

* The company pays for the entire space and allocates based on sq. metres used.
Required:
a.   Do you recommend discontinuing the Other Candy product line? Why or why not?
b.   If the Chocolate product line had been discontinued, corporate profits for the current year would have decreased by what amount?
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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AllopaAllopa
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dxpayne Author
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6 years ago
Shared this answer this my study group, thank you for helping us out
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