The Arielle Company Reported the Following Results for the Manufacture

question 133

Essay

The Arielle Company reported the following results for the manufacture and sale of one of its products known as Controllers during the most recent year.
$$\begin{array} { | l | r | } \hline \text { Sales } ( 6,500 \text { Controllers at } \$ 130 \text { each) } & \$ 845,000 \\\hline \text { Cost of sales } & 390,000 \\\hline \text { Distribution costs } & 65,000 \\\hline \text { Advertising ex pense } & 275,000 \\\hline \text { Salaries } & 25,000 \\\hline \text { Building costs } & \underline{145,000 }\\\hline \text { Operating loss } &\underline{ ( \$ 55,0000) }\\\hline\end{array}$$
The Arielle Company is trying to determine whether or not to discontinue the manufacture and sale of Controllers.The operating results reported above for last year are expected to continue in the foreseeable future if the product is not dropped.The building costs represent the costs of production facilities and equipment that the Controllers product shares with other products produced by Arielle.If the Controllers product were dropped,there would be no change in the building costs of the company.Management has determined that discontinuing the manufacture and sale of Controllers will have no effect on the company's other product lines.Determine the change in operating profits that will happen if the manufacture and sale of Controllers is discontinued.

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Definitions:

Small Stocks

Small stocks refer to shares of companies with a relatively small market capitalization, often considered to have high growth potential but also higher risk.

Capital Gains Yield

The price appreciation component of the total return on investment, excluding dividends or interest.

Shares

Units of ownership interest in a corporation or financial asset, providing shareholders with a claim on company assets and earnings.

Standard Deviation

Standard deviation is a statistical measure that quantifies the amount of variation or dispersion of a set of data values, typically used to assess the volatility of financial instrument prices.