General Business ACC212 Chapter Notes - Chapter 7: Income Statement
29 Nov 2017
School
Department
Course
Professor
Document Summary
If champ is eliminated, allocate its ,000 fixed costs: 2/3 to pro and. Incremental analysis of champ provides the same results (,000 - ,000) They should be subtracted from the contribution margin and if that results in a net loss, the segment should be eliminated. They should not be considered as they are not relevant. If that causes a loss in another segment, that segment should be eliminated as well. Resources are always limited: floor space for a retail firm, raw material, direct labour hours, or machine capacity for a manufacturing firm. Management must decide which products to make and sell to maximize net income. Produces standard and deluxe pen and pencil sets. Limiting resource 3,600 machine hours per month. Deluxe set has higher contribution margin: . Standard set takes fewer machine hours per unit. Approach used to identify and manage constraints so as to achieve company goals. Continual attempts to reduce or eliminate constraints.
