question archive D-Home Company manufacturers three items: D1, D2 and D3
D-Home Company manufacturers three items: D1, D2 and D3
Subject:AccountingPrice: Bought3
D-Home Company manufacturers three items: D1, D2 and D3. The management is considering dropping item D3 because it has an operating loss. D3 Sales Revenues Variable Costs Contribution Margin Fixed Cost Net Income Requirements: D1 $ 52,000 (9,000) 43,000 (15,000) $ 28,000 D2 $ 90,000 (62,000) 28,000 (23,000) S 5,000 $ 75,000 (50,000) 25,000 (36,000) $ (11,000) 1- Assume the fixed costs are unavoidable, Should D-Home drop item D3? 2- Assume 75% the fixed costs are avoidable, Should D-Home drop item D3?
