Chapter 10 Differential decision making Copr.,GoedlKindly Fl…
Chapter 10 Differential decision making Copr.,GoedlKindly Flag, Inc. produces two product lines, flags with emojis and flags with quotes. The Segmented Income Statement for the most recent fiscal year is provided below. The manager is considering dropping the Quotes product line. She collected the following additional data. 1.) Sales, variable expenses, and contribution margin are all directly traceable to the product lines. 2.) Fixed expenses are allocated to the product lines based on the percentage of sales. Of the fixed expenses allocated to the Quotes product line, $135,000 are fixed factory costs that would not be eliminated. The remaining amount will be eliminated if the Quotes product line is dropped. What is the financial advantage or disadvantage of dropping the Quotes product line?