Ask Question
10 May, 06:11

Type your answer in the box. Jay's Furniture makes several types of furniture including couches and loveseats. Last year total contribution margin was $900,000 for couches and $350,000 for loveseats. Loveseats had a segment margin of $50,000 and common fixed costs of $100,000 so the company is considering stopping loveseat production. If that happens, sales of couches is expected to increase by 10%, The net impact of stopping production of loveseats will (increase/decrease) profits by $ Read about thia Do you know the answer? I know it Think so Unsure No idea

+2
Answers (1)
  1. 10 May, 08:58
    0
    Increase profits by $40,000

    Explanation:

    The computation of the net impact of stopping production of love seats is shown below:

    = Contribution margin * increased percentage - segment margin

    = $900,000 * 10% - $50,000

    = $90,000 - $50,000

    = $40,000

    Since the amount comes in positive which means that the profits is increased by $40,000

    All other information which is given is not relevant. Hence, ignored it
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Type your answer in the box. Jay's Furniture makes several types of furniture including couches and loveseats. Last year total contribution ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers