prepare an incremental analysis of the effect of dropping the Children 6-10 product line.

Lego Inc. has three product lines in its retail stores: Children 3-5 years, Children 6-10 years, and Children 12+ years old. The allocated fixed costs are based on revenue and are unavoidable.

Results of the fourth quarter are presented below:

Children 3-5 Children 12+ Children 6-10 Total

Units sold 750 1,000 1,200 2,950

Revenue $22,500 $15,000 $9,600 $47,100

Variable departmental costs 12,000 8,000 5,000 25,000

Direct fixed costs 4,000 3,000 4,500 11,500

Allocated fixed costs 4,777 3,185 2,038 10,000

Net income (loss) $ 1,723 $815 $(1,938) $600

Demand of individual products is not affected by changes in other product lines.

Required

In a table format prepare an incremental analysis of the effect of dropping the Children 6-10 product line.

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