Marinette Company makes several products, including canoes

Accounting Nov 30, 2020

Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line The following information is available regarding its canoe segment. $2,600,000 MARINETTE COMPANY Income Statement-Canoe Segment Sales Variable costs Direct materials $ 570,000 Direct labor 620,000 Variable overhead 420,000 Variable selling and administrative 260,000 Total variable costs Contribution margin Fixed costs Direct 495,000 Indirect 420,000 Total fixed costs Net income 1.870.000 730,000 915.000 $ (185,000) 1. If canoes are discontinued, calculate the net income lost or gained 2. Should management discontinue the manufacturing of canoes? Complete this question by entering your answers in the tabs below. Required 1 Required 2 If canoes are discontinued, calculate the net income lost or gained. (Leave no cells blank. Enter zeros where appropriate.) Keep the department Eliminate the department Sales Expenses Search O
Complete this question by entering your answers in the tabs below. Required 1 Required 2 If canoes are discontinued, calculate the net income lost or gained. (Leave no cells blank. Enter zeros where appropriate.) Keep the department Eliminate the department Sales Expenses Total expenses Net Income (loss) 0 S Logo Required 2 > earch o 6
$2,600,000 MARINETTE COMPANY Income Statement-Canoe Segment Sales Variable costs Direct materials $570,000 Direct labor 620,000 Variable overhead 420,000 Variable selling and administrative 260,000 Total variable costs Contribution margin Fixed costs Direct 495,000 Indirect 420,000 Total fixed costs Net income 1,870,000 730,000 915,000 $ (185,000) 1. If canoes are discontinued, calculate the net income lost or gained. 2. Should management discontinue the manufacturing of canoes? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should management discontinue the manufacturing of cances? Should management discontinue the manufacturing of canoes?

Expert Solution

Req 1


	Keep the Department	Eliminate the Department
Sales	$ 2,600,000	$0
Expense:		$0
Direct materials	570,000	$0
Direct labor	620,000	$0
Variable overhead	420,000	$0
Variable selling and administrative	260,000	$0
Direct Fixed costs	495,000	$0
Indirec Fixed Cost	$420,000	$420,000

Total Expense	$ 2,785,000	$420,000
Net income ( Loss)	($185,000)	($420,000)
The canoe division should be		Kept
If Canoe division is eliminated , income will be		Lower by	$ 235,000

Req 2

2.
Canoes should not be discontinued.

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