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Illustration: Martina Company manufactures three models of tennis rackets Profitable lines: Pro and Master Unprofitable line Champ

Illustration: Martina Company manufactures three models of tennis rackets:

Profitable lines: Pro and Master

Unprofitable line: Champ

 

Pro

Master

Champ

Total

Sales

$800,000

$300,000

$100,000

$1,200,000

Variable Expenses

520,000

210,000

90,000

820,000

Contribution Margin

280,000

90,000

10,000

320,000

Fixed Expenses

80,000

50,000

30,000

160,000

Net Income

$200,000

$40,000

$(20,000)

$220,000

Should Champ be eliminated?

Prepare income data after eliminating Champ product line. Assume fixed costs are allocated 2/3 to Pro and 1/3 to Master.

Jun 23 2020 View more View Less

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