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Question(s) / Instruction(s):

ACCT 346
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Bravo Baking Co has expanded its product line to include several other specialty breads. The operating results for the last quarter are provided below.

Product                                     Hi-Lo           Whole Grain   Fruit & Nuts   Total

Revenues                               $67,575           $31,800           $15,900           $115,275

Variable prd costs                    $27,030           $12,720           $6,360             $46,110

Var. Sell & Admin.                    $13,515           $6,360             $3,180             $23,055

Contribution Margin                  $27,030           $12,720           $6,360             $46,110

Fixed Product Costs                 $5,000             $5,000             $5,000             $15,000

Fixed Sell & Admin.                  $5,700             $2,850             $2,850             $11,400

Allocated Common Cst             $5,000             $2,500             $2,500             $10,000

Net Income                             $11,330           $2,370             -$3,990           $9,710



Required: Bravo wants to know the effect on Net Income if it decides to discontinue the Fruit & Nuts product.
If Bravo eliminates Fruit & Nuts 50% of fixed costs can be avoided.
Prepare and incremental analysis showing the Net Income Effect of eliminating the Fruit & Nuts product.
What woud you advise Bravo to do?
Using the Table below, compute the Net Income for Bravo Baking after eliminating the Fruit & Nuts product.
Product                                                     Hi-Lo          Whole    Grain Fruit & Nuts          Total
Revenues
Variable product costs
Variable Selling & Administrative costs
Contribution Margin
Fixed Product Costs
Fixed Selling and Administrative Costs
Allocated Common Costs
Net Income

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