Chapter 7 Sandford Electronics sells desktops and notebook computers. Currently,

Question

Chapter 7 Sandford Electronics sells desktops and notebook computers. Currently, the desktop product line takes up If the desktop product line is dropped, salaries and other traceable fixed costs can be avoided. In addition, sales of approximately 50 percent of the company's retail floor space. The president of the company is trying to decide whether the company should continue offering desktops or just concentrate on notebooks notebooks will increase by 12 percent. Allocated fixed costs are assigned based on labor hours Notebooks Deskto Total 1,200,000 $ 700,000 $ 500,000 $ 800,000 $ 520,000 S 280,000 S 2,000,000 1,220,000 780,000 Sales Less cost of goods sold Gross margin Less traceable fixed costs Salaries Other Less allocated fixed costs Rent Insurance Cleaning & Maintenance President's salary Other Total costs Net income 175,000 S 60,000$ 140,000 $ 65,000 S 315,000 125,000 24,000 6,000 7,000 130,000 12,000 619,000 161,000 13,333 10,667 $ 2,667 S 3,111 $ 57,778 S 3,333 S 3,889 S 72,222$ 6.667 S 334,444 $ 165,556S 5,333 284,556 $ (4,556) S For each item listed below indicate the appropriate value if the Desktop line is dropped and only Notebooks are sold Sales Cost of Goods Sold Gross margin Salaries Other Rent Insurance Cleaning President's salary er Net income

Explanation / Answer

Note :

Particular Amount ($) Sales 1,344,000 Less Cost of Goods Sold 784,000 Gross Margin 560,000 Less : Fixed Costs Salaries 175,000 Others 60,000 Rent 24,000 Insurance 6,000 Cleaning 7,000 Preident's salary 130,000 Other 12,000 Net Income $146,000

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