Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is available regarding its canoe segment.
MARINETTE COMPANY
Income Statement-Canoe Segment
Sales $2,100,000
Variable costs
Direct materials $470,000
Direct labor 520,000
Variable overhead 320,000
Variable selling and administrative 210,000
Total variable costs 1,520,000
Contribution margin 580,000
Fixed costs
Direct 395,000
Indirect 320,000
Total fixed costs 715,000
Net income $(135,000)
1. If canoes are discontinued, calculate the net income lost or gained.
2. Should management discontinue the manufacturing of canoes?
Answers: 1
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Marinette Company makes several products, including canoes. The company has been experiencing losses...
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