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  • Solution: Profitability Analysis, When The Jacket " Gale " Is Dropped

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    Maha Hamdy
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    The document discusses profitability analysis of keeping or dropping a jacket called "Gale." It notes that the $168,000 total fixed costs are irrelevant to the analysis as they cannot be changed in the short run. Dropping Gale would cause a reduction in profits. No specific profit or sales figures are provided for keeping or dropping Gale.

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    Business Management

    Original Title

    14AA

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    The document discusses profitability analysis of keeping or dropping a jacket called "Gale." It notes that the $168,000 total fixed costs are irrelevant to the analysis as they cannot be changed in the short run. Dropping Gale would cause a reduction in profits. No specific profit or sales figures are provided for keeping or dropping Gale.

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    12 views2 pages

    Solution: Profitability Analysis, When The Jacket " Gale " Is Dropped

    Uploaded by

    Maha Hamdy
    The document discusses profitability analysis of keeping or dropping a jacket called "Gale." It notes that the $168,000 total fixed costs are irrelevant to the analysis as they cannot be changed in the short run. Dropping Gale would cause a reduction in profits. No specific profit or sales figures are provided for keeping or dropping Gale.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Solution

    * Profitability Analysis, When the Jacket “ Gale “ is Dropped :-

    * Profitability Analysis, When the Jacket “ Gale “ is Kept :-

    * Notes :
    1. The $3.54 fixed cost per unit is irrelevant for the analysis of the current
    profitability of the three products.

    * Because the $168,000 total fixed costs are unchangeable in the short run, they are
    irrelevant for this analysis. That is, no changes in product mix, including the
    deletion of Gale, will affect total fixed costs in the coming year.
    2. Dropping Gale Causes reduction in profits as :

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