Recommendation for to keep or discontinue heat exchange

Sep 1st, 2015
DotaCN
Category:
Art Design
Price: $20 USD

Question description

Apa format paper

Proper citation, such as usine direct or words of your own. Direct quote must have quotation as “Internal control is” (Internal

Control, 2015). Etc give the page number (p. or paragraph (para 2).

The citation and references must match in paper do not use [] for citation

Length:  2 pages in detail explanation

The general manager at the Overall Manufacturing Company has submitted the following information for a specific line of heat exchangers with the recommendation to discontinue the round style heat exchanger because of its continued net operating income losses.

Overall Manufacturing Company

Heat Exchangers

Total

Round

Rectangular

Octagonal

Sales

$1,000,000

$140,000

$500,000

$360,000

Less variable expenses

$410,000

$60,000

$200,000

$150,000

Contribution margin

$590,000

$80,000

$300,000

$210,000

Less fixed expenses:

Advertising

$216,000

$41,000

$110,000

$65,000

Depreciation

$95,000

$20,000

$40,000

$35,000

Line supervisors' salaries

$19,000

$6,000

$7,000

$6,000

General factory overhead*

$200,000

$28,000

$100,000

$72,000

Total fixed expenses

$530,000

$95,000

$257,000

$178,000

Net operating income (loss)

$60,000

$(15,000)

$43,000

$32,000

*A common fixed cost that is allocated on the basis of sales dollars

Analyze the above information to determine if the round heat exchanger should be discontinued. The special equipment that is used to produce the round heat exchanger has no resale value. If the round heat exchanger is discontinued, the two line supervisors who are assigned to the model would be discharged. Overall Manufacturing Company has no other use for the capacity that is now being used to produce the round heat exchanger.

Include the following in your analysis:

  • Should the production and sale of the round heat exchanger be discontinued? Show your analysis to support your answer.
  • How might this same information be presented to make it more useful to management in assessing the long-run profitability of its various product lines?
  • What policy change would you recommend to management?

Thanks


Tutor Answer

(Top Tutor) Daniel C.
(997)
School: Rice University
PREMIUM TUTOR

Studypool has helped 1,244,100 students

Summary
Quality
Communication
On Time
Value
kevin12622
Mar 21st, 2017
" Goes above and beyond expectations ! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1826 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors