Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount): Wimpy Mild Medium HotAtomicContribution margin$( 2,000) $45,000 $35,000 $50,000 $162,000Segment margin$( 16,000) $( 5,000) $7,000 $10,000 $94,000Allocated common fixed expenses$10,000 $10,000 $10,000 $10,000 $10,000Segment margin less allocatedcommon fixed expenses$(26,000) $(15,000) $(3,000) $0 $84,000Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue?
A. Wimpy, Mild, and Medium
B. Wimpy
C. no flavors should be discontinued
D. Wimpy and Mild
Answer: D
You might also like to view...
Briefly share about the two principles introduced by John Rawls.
What will be an ideal response?
Which of the following is a characteristic of a good intercultural communicator?
A. smart B. disrespectful C. nondefensive D. judgmental
Which type of retailer has a high proportion of merchandise space to selling space?
a. full-service specialty store b. supermarket c. warehouse store d. gas station
A firm’s operations strategy ______.
a. guides a firm in using its operational resources effectively to help it achieve a competitive advantage b. provides a road map for decisions regarding business acquisitions or divestitures that the firm’s operations managers make c. Is directly influenced by a firm’s corporate strategy d. Directly influences a firm’s corporate strategy