Question

Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows: A B C Total Sales $2,247,000 $1,404,000 $1,809,300 $5,460,300 Variable expenses 1,622,000 600,400 1,095,200 3,317,600 Contribution margin $625,000 $803,600 $714,100 $2,142,700 Advertising expense $517,000 $430,000 $520,000 $1,467,000 Depreciation expense 15,900 10,000 20,600 46,500 Corporate expenses 93,900 81,600 105,000 280,500 Total fixed expenses $626,800 $521,600 $645,600 $1,794,000 Operating income $(1,800) $282,000 $68,500 $348,700 Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees. (a) Restate the income statement in segment margin format.

          Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows:

                    A            B            C           Total
Sales          $2,247,000   $1,404,000   $1,809,300   $5,460,300
Variable expenses  1,622,000     600,400    1,095,200    3,317,600
Contribution margin $625,000    $803,600     $714,100   $2,142,700
Advertising expense $517,000    $430,000     $520,000   $1,467,000
Depreciation expense  15,900       10,000       20,600       46,500
Corporate expenses    93,900       81,600      105,000      280,500
Total fixed expenses $626,800    $521,600     $645,600   $1,794,000
Operating income    $(1,800)    $282,000      $68,500     $348,700

Advertising expense - Specific to each product.
Depreciation expense - Specific to each product; no other use available, no resale value.
Corporate expenses - Allocated based on number of employees.

(a) Restate the income statement in segment margin format.

Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows:

A B C Total
Sales 2,247,0001,404,000 1,809,3005,460,300
Variable expenses 1,622,000 600,400 1,095,200 3,317,600
Contribution margin 625,000803,600 714,1002,142,700
Advertising expense 517,000430,000 520,0001,467,000
Depreciation expense 15,900 10,000 20,600 46,500
Corporate expenses 93,900 81,600 105,000 280,500
Total fixed expenses 626,800521,600 645,6001,794,000
Operating income (1,800)282,000 68,500348,700

Advertising expense - Specific to each product.
Depreciation expense - Specific to each product; no other use available, no resale value.
Corporate expenses - Allocated based on number of employees.

(a) Restate the income statement in segment margin format.

Added by Elijah D.

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