1 Questions
Trio Sports Manufacturer produces equipment for three sports: baseball, basketball, and golf. The accountants prepared a segmented contribution margin statement for the past year based on the three types of products manufactured as shown below. The CEO is concerned with the basketball equipment segment as it has been showing a loss for the past few years.
Trio Sports Manufacturer Segmented Contribution Margin Statement For the Year Ended December 31, 2019 Baseball Basketball Golf Total Revenue $716,000 $585,000 $453,000 $1,754,000 Variable Costs $223,000 $281,000 $219,000 $723,000 Contribution Margin $493,000 $304,000 $234,000 $1,031,000 Fixed Costs $417,000 $356,000 $144,000 $917,000 Income from Operations $76,000 $-52,000 $90,000 $114,000
Recommend whether Trio should keep or drop the basketball equipment product line based on the following independent scenarios: Do not enter dollar signs or commas in the input boxes. Use the negative sign for a decrease in income. Indicate keep or drop using the drop-down lists.
Assume that all the fixed costs relating to the basketball segment would no longer be incurred by the company if the product line is dropped. Change in Income from Operations: $Answer
Trio should Answer drop the basketball line
This quiz presents a scenario where Trio Sports Manufacturer is analyzing whether to keep or drop the basketball equipment product line based on financial data. Users are asked to make recommendations by inputting figures and selecting options. The goal is to evaluate the profitability of the basketball segment.
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