When MrDing L $\text { Product Lines }$ *These Traceable Expenses Could Be Eliminated If the Product Lines

question 33

Essay

When Mr.Ding L.Berry,president and chief executive of Berry,Inc.,first saw the segmented income statement below,he flew into his usual rage: "When will we ever start showing a real profit? I'm starting immediate steps to eliminate those two unprofitable lines!"
$\text { Product Lines }$
$\begin{array}{|l|r|r|r|r|}\hline & \text { Total } & \text { U } & \text { V } & \text { W } \\\hline \text { Sales } & \$ 250,000 & \$ 100,000 & \$ 75,000 & \$ 75,000 \\\hline \text { Variable expenses } & \$ 119,000 & \$ 37,500 & \$ 35,000 & \$ 47,000 \\\hline \text { Contribution margin } & \$ 131,000 & \$ 63,000& \$ 40,00 0 & \$ 28,000 \\\hline \text { Traceable fixed expenses* } & \$ 98,000 & \$ 31,00 & \$ 37,000 & \$ 30,000 \\\hline \text { Common expenses, allocated } & \$ 32,900 & \$ 18,000& \$ 10,500 & \$ 4,400 \\\hline \text { Operating income (loss) } & \$ 100 & \$ 14,000 & \$(7,500) & \$(6,400) \\\hline\end{array}$
*These traceable expenses could be eliminated if the product lines to which they are traced were discontinued.
Required:
Recommend which segments,if any,should be eliminated.Prepare a report in good form to support your answer.

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