Licnep Itd has three major product lines soda juice and ice cream. Licnep is considering discontinuing producing ice cream because the divisional income statement indicates it is being sold at a loss. The most recent annual income statement is outlined below. Soda Juice Ice Cream Sales 48,330,000 44,980,000 26,230,000 Variable Cost 16,500,000 19,600,000 12,700,000 Fixed Cost 21,800,000 24,400,000 18,300,000 Operating

Sep 8, 2023

Licnep Itd has three major product lines soda juice and ice cream. Licnep is considering discontinuing producing ice cream because the divisional income statement indicates it is being sold at a loss. The most recent annual income statement is outlined below.

Soda Juice Ice Cream
Sales 48,330,000 44,980,000 26,230,000
Variable Cost 16,500,000 19,600,000 12,700,000
Fixed Cost 21,800,000 24,400,000 18,300,000
Operating Income 10,030,000 980,000 -4770000

The fixed costs include fixed costs directly attributable to each product line as well as allocated common costs. The portion of directly attributable fixed costs included in total fixed costs is 40% for soda; 75% for juice and 55% for ice cream.

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Licnep Itd has three major product lines soda juice and ice cream. Licnep is considering discontinuing producing ice cream because the divisional income statement indicates it is being sold at a loss. The most recent annual income statement is outlined below. Soda Juice Ice Cream Sales 48,330,000 44,980,000 26,230,000 Variable Cost 16,500,000 19,600,000 12,700,000 Fixed Cost 21,800,000 24,400,000 18,300,000 Operating
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Should Lincep Ltd discontinue making Ice cream? why?

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