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    Product Income Statement

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    Vulcan Swimsuit Company is considering dropping its line of women's beach robes. A recent product income statement for the robe line follows:

    Revenue $950,760
    Cost of goods sold 861,840
    Gross margin 88,920
    Selling and administrative expenses 136,800
    Net loss $(47,880)

    Factory overhead accounts for 35 percent of the cost of the goods sold and is one third fixed. These data are believed to reflect conditions in the immediate future.

    Required:

    Should the line be dropped?

    © BrainMass Inc. brainmass.com October 9, 2019, 8:20 pm ad1c9bdddf
    https://brainmass.com/business/income-statement/product-income-statement-147628

    Solution Preview

    Please see the response to your positing as below:
    Calculation of Factory overheads:
    Factory overhead = cost of goods sold*35% =861840*35% =301644

    Fixed elements in factory ...

    Solution Summary

    Solution contains computations of increase or decrease in overall operating income if the line is discontinued .

    $2.19