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Toxemia Salsa Company manufactures five flavors of salsa. Last year, Toxemia generated net operating

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Toxemia Salsa Company 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 indiciate a negative amount);Wimpy Mild Medium Hot Atomic;Contribution margin $(2,000) $45,000 $35,000 $50,000 $162,000;Segment margin $(16,000) $(5,000) $7,000 $10,000 $94,000;Segment margin less allocated common fixed expenses $(26,000) $(15,000) $(3,000) $0 $84,000;Toxemia 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?

 

Paper#25405 | Written in 18-Jul-2015

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