Brach/segment - Adding or discontinuing: ABC Inc. producing three kinds of chocolate; in almond, nuts, and pistachios. T

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Brach Segment Adding Or Discontinuing Abc Inc Producing Three Kinds Of Chocolate In Almond Nuts And Pistachios T 1 (70.26 KiB) Viewed 68 times

Brach/segment - Adding or discontinuing: ABC Inc. producing three kinds of chocolate; in almond, nuts, and pistachios. The following are financial performance for the three products during 2020: Data Almond Nuts Pistachio Total Revenues 300,000 400,000 180,000 880,000 Costs: DM 100,000 140,000 70,000 (310,000) DL 50,000 70,000 40,000 (160,000) V.MOH 10,000 25,000 10,000 (45,000) E.MOH 60,000 80,000 50,000 (190,000) Operating expense 40,000 40,000 40,000 (120,000) Operating income 40,000 45,000 (30,000) 55,000 Notes: 1. The fixed manufacturing overhead are two parts; general with a total of 90,000 that are distributed equally between the departments, and product-specific. 2. 70% of the operating expenses are fixed. Required: 1. Based on the above information, do you advise the company to stop producing chocolate with pistachios assuming that in case of ceasing this product, only the specific-product cost will be eliminated. 2. If the company ceased producing chocolate with pistachios, what would be the effect on the total income of the company?