a computer enhancement company, bas three product lines: audio enhancers, video

Question

a computer enhancement company, bas three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are Runner Gaming, allocated based on relative sales. A product line income statement follows: Runner Gaming Income Statement For the Year Ended December 31, 2017 Audio Video Accelerators Total Sales Less cost of goods sold Gross margin Less other variable costs Contribution margin Less direct salaries Less common fixed costs: $1,200,000 $2,450,000 $2,400,000 $6,050,000 730,000 1,435,000 2,070,000 4,235,000 330,000 1,815,000 48,80068,52018,710 136,030 311,290 1,678,970 58,680 371,550 470,000 1,015,000 421,200 946,480 140,300 172,570 Rent Utilities Depreciation 11,970 25,830 4,3709,430 5,890 12,710 Other administrative costs79,230 170,970 $179,440 $554,970 25,200 63,000 9,200 23,000 12,400 31,000 166,800417,000 39,010 $773,420 Net income Since the profit for accelerator devices is relatively low, the company is considering dropping this product line. Determine the annual impact on profit of dropping accelerator products. The company ill be off by if it drops accelerators. Question Attempts: O of 5 used

Explanation / Answer

The company will be making annual profit off by $ 252,610

annual impact on profit=Net income+rent+utilies+depreciation+other administrative costs

=39010+25200+9200+12400+166800=$252,610 (Loss)

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