need help 459160

ACCT 346

Bravo Baking Co has expanded its product line to include several other specialty breads. The operating results for the last quarter are provided below.

Product Hi-Lo Whole Grain Fruit & Nuts Total

Revenues $67,575 $31,800 $15,900 $115,275

Variable product costs $27,030 $12,720 $6,360 $46,110

Variable Selling & Administrative costs $13,515 $6,360 $3,180 $23,055

Contribution Margin $27,030 $12,720 $6,360 $46,110

Fixed Product Costs $5,000 $5,000 $5,000 $15,000

Fixed Selling and Administrative Costs $5,700 $2,850 $2,850 $11,400

Allocated Common Costs $5,000 $2,500 $2,500 $10,000

Net Income $11,330 $2,370 -$3,990 $9,710

Required: Bravo wants to know the effect on Net Income if it decides to discontinue the Fruit & Nuts product.

If Bravo eliminates Fruit & Nuts 50% of fixed costs can be avoided.

Prepare and incremental analysis showing the Net Income Effect of eliminating the Fruit & Nuts product.

What woud you advise Bravo to do?

Using the Table below, compute the Net Income for Bravo Baking after eliminating the Fruit & Nuts product.

Product Hi-Lo Whole Grain Fruit & Nuts Total

Revenues 0

Variable product costs 0

Variable Selling & Administrative costs 0

Contribution Margin 0

Fixed Product Costs 0

Fixed Selling and Administrative Costs 0

Allocated Common Costs 0

Net Income 0