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abbz13
abbz13
24.04.2020 • 
Business

Keith Inc. has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes in other product lines. 40% of the fixed costs are avoidable, and the other 60% are allocated. Results of June follow: Sour Cream Ice Cream Yogurt Butter TotalUnits sold 2,000 500 499 200 3,100Revenue 10,000 20,000 10,000 20,000 60,000Variable departmental costs 6,000 13,000 4,200 4,800 28,000Fixed costs 7,000 2,000 3,000 7,000 19,000Net income (loss) (3,000) 5,000 2,800 8,200 13,000Prepare an incremental analysis of the effect of dropping the Sour Cream product line. Should the Sour Cream product line be retained or eliminated, and what is the amount of incremental net income or net loss that would result from eliminating the product line?

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