Discontinue Product Assignment

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Discontinue a Product Problem

 

Scenario:  RYT (aka RotYourTeeth) 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.

    • 7 years ago
    Discontinue Product Assignment
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