Please show all steps The following information pertains to Number 5-7 Electroni

Question

Please show all steps The following information pertains to Number 5-7 Electronic Playground, Inc. (EPI) manufactures and sells computer games for children. The company has several product lines based on the age range of the target market and whether the games are marketed as educational or entertainment. EP sells both individual games as well as packaged sets. All games are in CD format, and some utilize accessories such as steering wheels, electronic tablets, and hand cóntrols. To date, EPI has developed and manufactured all CDs itself as well as the accessories and packaging for all of its products. The affordability of computers and the incorporation of computer activities into junior high and elementary school curriculums has led to a significant increase in sales to younger children. EPI has always included games for younger children but now wants to expand its business to capitalize on changes in the industry. The company currently has excess capacity and is investigating several possible ways to improve profitability. market has traditionally been targeted at teenagers and young adults. However, the increasing

Explanation / Answer

1) Incremental Effecr of eliminating the post office Polka: Decrease in Sales Revenue $ -15,000.00 Decrease in Variable cost $   10,000.00 Less: Decrease in fixed cost $     1,500.00 Effect on Profit($-15000+$10000+$1500) $   -3,500.00 EPI would not eliminate POP Polka product line because it would result decrease in Company's profit by $3500 2) Incremental Effecr of eliminating the post office Polka: Decrease in Sales Revenue $ -15,000.00 Decrease in Variable cost $   10,000.00 Less: Decrease in fixed cost $     5,200.00 Effect on Profit($-15000+$10000+$5200) $         200.00 EPI should eliminate POP Polka product line because it would result increase in Company's profit by $200

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