The Mansfield Company Manufactures and Sells Two Lines of Fishing

question 51

Multiple Choice

The Mansfield Company manufactures and sells two lines of fishing rods.During the most recent accounting period,the Pro line and the Novice line sold 15,000 and 2,000 units,respectively.The company's most recent financial statements are shown below: $\begin{array}{c}\begin{array}{|l}\hline\\\hline \text {Sales}\\\hline \text {Less cost of goods sold:}\\\hline \text {Unit-level production cost}\\\hline \text {Depreciation, production equipment}\\\hline \text {Gross margin}\\\hline \text {Less operating expenses:}\\\hline \text {Unit-level selling and admin. Costs}\\\hline \text {Corporate-level facility expenses (fixe d) }\\\hline \text {Net income (loss) }\\\hline\end{array}\begin{array}{|l}\hline \text {Pro}\\\hline\$ 900,000\\\hline\\\hline600,000 \\ \hline125,000 \\ \hline \$ 175,000\\\hline\\\hline40,000 \\\hline 36,000 \\ \hline \$ \quad 99,000 \\ \hline\end{array}\begin{array}{|l|}\hline\text { Novice } \\\hline\$ \quad 240,000 \\\hline\\\hline135,000 \\\hline 50,000 \\\hline \$55,000 \\\hline\\\hline 65,000 \\\hline 36,000 \\\hline \$ \quad(46,000) \\\hline \end{array}\end{array}$
Based on this information,the company should: The word "Costs" should not be capitalized mid-way down.Also,change "admin." to:
Administrative
The cell should read:
Unit-level selling and administrative costs

• A) Eliminate the Novice line because it is operating at a loss.
• B) Keep the Novice line because it contributes $40,000 to total profitability.
• C) Keep the Novice line because it contributes $55,000 to total profitability.
• D) It is impossible to determine with the given information.
• The word "Costs" should not be capitalized mid-way down.Also,change "admin." to:
• Administrative
• The cell should read:
• Unit-level selling and administrative costs

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