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PT ViMi is a company that produces clone iPhones. The 2 products produced are the iPhone 11 Pro Max and iPhone 12 Pro Max. The iPhone 11 Pro Max sells for $ 300, while the iPhone 12 Pro Max sells for

PT ViMi is a company that produces clone iPhones. The 2 products produced are the iPhone 11 Pro Max and iPhone 12 Pro Max. The iPhone 11 Pro Max sells for $ 300, while the iPhone 12 Pro Max sells for $ 325. The following is the income statement for the period of December 31, 2020 according to variable cost calculations for the two products with sales information for the 11 Pro Max of 20,000 units and the iPhone 12 Pro Max of 25,000 units.

Revenues

Iphone 11 Pro Max

$6.000.000

Iphone 12 Pro Max

$8.125.000

Variable Expense

$3.850.000

$4.990.000

Contribution Margin

$2.150.000

$3.135.000

Fixed Expense

$1.500.000

$2.500.000

Operating Income

$650.000

$635.000


From the fixed expense above, it is known that $ 200,000 is a fixed expense that cannot be eliminated even though one of the products is closed, where the charges are 50% for direct expense and 50% for common fixed expense.

Required:

  1. Compile a segmented income statement for the two products!
  2. Prepare an income statement if the iPhone 12 Pro Max product is discontinued!
  3. Should production of the iPhone 12 Pro Max be stopped? give reasons and prove it with your calculation!
  4. If the company stops selling the iPhone 12 Pro Max and then has an impact on the iPhone 11 Pro Max sales increase of 25%, compile an income statement!
  5. Should the production of the iPhone 12 Pro Max be stopped when referring to point 4, give reasons!

Apr 19 2021 View more View Less

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