Hong Publishing has purchased Lang Publishing. After reviewing titles from both companies, a decision must be made to determine what titles must be dropped. The following information is available to make the decision.
|
Title X
|
|
Title Y
|
|
Title Z
|
Sales |
$101,000 |
|
$151,000 |
|
$201,000 |
Variable Cost |
51,000 |
|
76,000 |
|
99,000 |
Contribution Margin |
$50,000 |
|
$75,000 |
|
$102,000 |
Direct Fixed Cost |
19,000 |
|
29,000 |
|
41,000 |
Allocated Common Fixed Cost |
10,000 |
|
15,000 |
|
20,000 |
Net Income |
$21,000 |
|
$31,000 |
|
$41,000 |
A. What is the total income if all titles were produced?
$_____
B. If Title X was dropped, what would be the effect on Net Income?
$_____ _____
C. How much did Title X Contribute to Fixed Costs?
$_____
D. Determine the cost and the amount that will remain even if Title X is dropped.
_____ $_____
E. Which costs and amount will be eliminated if Title X is dropped?
_____ $_____
_____ $_____
Extracted text: Hong Publishing has purchased Lang Publishing. After reviewing titles from both companies, a decision must be made to determine what titles must be dropped. The following information is available to make the decision. Title X Title Y Title Z Sales $101,000 $151,000 $201,000 Variable Cost 51,000 76,000 99,000 Contribution Margin $50,000 $75,000 $102,000 Direct Fixed Cost 19,000 29,000 41,000 Allocated Common Fixed Cost 10,000 15,000 20,000 Net Income $21,000 $31,000 $41,000 A. What is the total income if all titles were produced? B. If Title X was dropped, what would be the effect on Net Income? C. How much did Title X Contribute to Fixed Costs? D. Determine the cost and the amount that will remain even if Title X is dropped. E. Which costs and amount will be eliminated if Title X is dropped?