The management accountant for Martha's Book Store has prepared the following income statement for the most current year.

Cookbook Travel Book Classics Total

Sales $60,000 $100,000 $40,000 $200,000

Cost of goods sold 36,000 65,000 20,000 121,000

Contribution margin 24,000 35,000 20,000 79,000

Order and delivery processing 18,000 21,000 8,000 47,000

Rent (per sq. foot used) 2,000 1,000 3,000 6,000

Allocated corporate costs 7,000 7,000 7,000 21,000

Corporate profit $ (3,000) $ 6,000 $ 2,000 $ 5,000

7. If the cookbook product line had been discontinued prior to this year, the company would have reported

a. greater corporate profits.

b. the same amount of corporate profits.

c. less corporate profits.

d. resulting profits cannot be determined.

Question

Business

Korbin Thornton

14 March, 02:59

The management accountant for Martha's Book Store has prepared the following income statement for the most current year.

Cookbook Travel Book Classics Total

Sales $60,000 $100,000 $40,000 $200,000

Cost of goods sold 36,000 65,000 20,000 121,000

Contribution margin 24,000 35,000 20,000 79,000

Order and delivery processing 18,000 21,000 8,000 47,000

Rent (per sq. foot used) 2,000 1,000 3,000 6,000

Allocated corporate costs 7,000 7,000 7,000 21,000

Corporate profit $ (3,000) $ 6,000 $ 2,000 $ 5,000

7. If the cookbook product line had been discontinued prior to this year, the company would have reported

a. greater corporate profits.

b. the same amount of corporate profits.

c. less corporate profits.

d. resulting profits cannot be determined.

+2

Answers (1)

Know the Answer?

Liberty Hill · Answer 1

c. less corporate profits.

Explanation:

Subtract all the expenses from the revenue that are solely associated with Cookbook product line.

60000 - 36000 - 18000 - 2000 = 4000

This $4000 suggests that CookBook product line contributes profit of 4000 towards the company. So If the cookbook product line had been discontinued prior to this year, the company would have reported less corporate profits by $4000.