ACCT 610-The remaining fixed expenses are considered

The remaining fixed expenses are considered to be corporate-wide expenses that have been allocated to each product line based on sales revenue.The company is concerned about the performance of product A, and you have been asked to analyze the situation and recommend to the president whether to continue or discontinue the product. During your investigation, you discover that certain fixed expenses are traceable directly to each product line as indicated here:The segmented income statement for XYZ Company for the year ended December 31, 2016, follows: XYZ Company Segmented Income Statement For the year ended 12/31/2016 Total Company Product A Product B Product C Sales 615000 306000 123000 186000 variable expenses 276000 150000 55000 71000 contribution margin 339000 156000 68000 115000 fixed expenses 280000 162000 42000 76000 Operating income 59000 (6000) 26000 39000 The company is concerned about the performance of product A, and you have been asked to analyze the situation and recommend to the president whether to continue or discontinue the product. During your investigation, you discover that certain fixed expenses are traceable directly to each product line as indicated here: Total Company Product A Product B Product C Direct Fixed Expenses 106000 76000 11000 19000 The remaining fixed expenses are considered to be corporate-wide expenses that have been allocated to each product line based on sales revenue. a) What will be the effect of the decision to discontinue product A on operating income? Operating income will _______ by ___________ for the XYZ Company if it discontinues Product A b) Assume that product A is discontinued. Prepare a segmented income statement for the remaining products. Allocate corporate-wide fixed expenses as described. (Round intermediate calculations to 2 decimal places.) Total company Product B Product C Sales Variable expenses Contribution Margin direct fixed expenses common fixed expenses operating income/loss c) Starting with the segmented income statement, use the information you discovered during your investigation to present a more appropriately designed segmented income statement. Total Company Product A Product B Product C Sales Variable Expenses Contribution Margin Direct Fixed expenses segment margin common fixed expenses operating income/loss

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