(Solution) - Justa Coporation produces and sells three products A B and -(2025 Original AI-Free Solution)
Paper Details
Justa Coporation produces and sells three products, A, B, and C. The three products are sold in a local market and in a regional market. At the end of the first quarter of the current year, the following income statement was prepared:
-1.png)
In attempting to decide whether to eliminate the regional market, management gathered the following information:
-2.png)
Required:
(1) Prepare the quarterly income statement showing contribution margin by market and in total.
(2) Assuming there are no alternative uses for Justa Corporation's present capacity, should the regional market be dropped? Why or why not?
(3) Prepare the quarterly income statement showing contribution margin by product.
(4) A new product to replace Product C can be ready for sale next year if Justa Corporation continues its research. The new product can be produced by converting the equipment presently used in production Product C. The conversion will increase fixed costs by $10,000 per quarter. Calculate the minimum contribution margin per quarter for the new product if Justa Corporation is to be no worse off financially than at present.