Business, 26.03.2020 04:22 vallhernandez13

Parino Company has three product lines in its retail stores: books, videos, and music. The allocated fixed costs are based on units sold and are unavoidable. Demand of individual products is not affected by changes in other product lines. Results of the fourth quarter are presented below:

Books Music Videos Total

Units sold 1,000 2,000 2,000 5,000

Revenue $ 24,000 $ 48,000 $ 30,000 $ 102,000

Variable departmental costs 15,000 22,000 23,000 60,000

Direct fixed costs 3,000 6,000 4,000 13,000

Allocated fixed costs 4,400 8,800 8,800 22,000

Net income (loss) $ 1,600 $ 11,200 $ (5,800 ) $ 7,000 Instructions:A. Prepare an incremental analysis of the effect of dropping the Video product line. B. Should Parino Eliminate the Videos? Briefly indicate why or why not.

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Parino Company has three product lines in its retail stores: books, videos, and music. The allocated...

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