The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:
Sales of 15,000 units $150,000
Variable expenses 120,000
Contribution margin 30,000
Fixed expenses 40,000
Net operating loss $ (10,000)
If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. The annual financial advantage (disadvantage) for the company from discontinuing the production and sale of Doombugs would be:
a. $10,000
b. ($22,000)
c. $18,000
d. ($30,000)
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow: Sales of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
A company pays $1,900 for supplies previously purchased on account. Indicate the amount of increases and decreases in the accounting equation.
Answers (1)
A 7-year municipal bond yields 4.8%. Your marginal tax rate (including state and federal taxes) is 27%. What interest rate on a 7 year corporate bond of equal risk would provide you with the same after-tax return? a. 5.64% b. 5.93% c. 6.25% d. 6.
Answers (1)
During 2019, Hungryman had $18,800,000 of credit sales, collected $17,945,000 of accounts receivable, and wrote off $60,000 of accounts receivable as uncollectible.
Answers (1)
Among the following choices, an operations manager might best evaluate political risk of a country by looking at which type of country ranking? a. based on magnitude of government social programs b. based on corruption based on competitiveness c.
Answers (1)
Robert's coworkers have decided to organize a strike against their employer. they say they won't report to work until they receive a pay increase.
Answers (1)
New Questions in Business
Kane Company's employees earn vacation time at the rate of 1 hour per 40-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates).
Answers (1)
Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value.
Answers (1)
Which of the following actions will likely cause a project to fail? A) dedicating valuable team member time to identify risk events B) spending project funding to procure needed tools and spare parts C) unclear or conflicting stakeholder
Answers (1)
Mcgregor company allows customers to pay with credit cards. the credit card company charges mcgregor 2% of the sale. when a customer uses a credit card to pay mcgregor $300 for services provided, mcgregor would:
Answers (1)
Net worth is the difference between a firm's assets and its liabilities. a. True b. False
Answers (1)