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Clinton Company sells two items, product A and product B




Question;Question 3: (Total 7 Marks)Clinton Company sells two items, product A and product B. The company is considering dropping product B. It is expected that sales of product A will increase by 40% as a result. Dropping product B will allow the company to cancel its monthly equipment rental costing $100 per month. The other existing equipment will be used for additional production of product A. One employee earning $200 per month can be terminated if product B production is dropped. Clinton's other fixed costs are allocated and will continue regardless of the decision made. A condensed, budgeted monthly income statement with both products follows:Product A Product B TotalSales $10 000 $8000 $18 000Direct materials 2500 2000 4500Direct labour 2000 1200 3200Equipment rental 300 2600 2900Other allocated overhead 1000 2100 3100Operating profit $4200 $100 $4300Required:Prepare an incremental analysis to determine the financial effect of dropping product B. Should the company drop Product B?Question 5: (Total 4 Marks)Read one recent (year 2000 onwards) online available/accessible journal article on ?social, economic, and/or environmental sustainability? and summarise it your own words (300-350 words). You must provide a valid link to the article for the marker to access and review (students responses will be randomly reviewed by the marker using the link provided for accuracy and relevance). If the article could not be accessed by the marker using the link you have provided, no marks will be awarded for this question.


Paper#38372 | Written in 18-Jul-2015

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