discontinue
blaster30020RYT Candy Company sells lollipops.
Last year the company sold 10,000,000 lollipops for $1,000,000.
The Variable Costs were $350,000 and the Net Profits were $100,000
Administration has directed management to double profits in the next year.
ASSIGNMENT: DETERMINE whether RYT should discontinue a product line to increase profitability.
RYT has been evaluating its various product lines and is specifically analyzing one location that produces three flavors: Cherry, Lemon, and Blueberry. Further analysis indicates that 20% of COGS is variable and 30% of Selling and Admin expenses are variable.
Given the following data for the month of September, RYT is considering discontinuing the Blueberry flavor. What would you advise? Support your position.
|
| Cherry | Lemon | Blueberry |
| Sales | $18,000 | $26,000 | $9,000 |
| COGS | 7,000 | 12,000 | 4,000 |
| Gross Profit | 11,000 | 14,000 | 5,000 |
| Selling and Admin Exp | 7,000 | 8,000 | 6,000 |
| Net Income | 4,000 | 6,000 | (1,000) |
13 years ago
10
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profitability.xlsx
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