The Management Accountant for the Chocolate S'more Company Has Prepared

Essay

The management accountant for the Chocolate S'more Company has prepared the following income statement for the most current year:
$$\begin{array} { l r r r r } & \text { Chocolate } & \text { Chocolate Lite } & \text { Fudge } & \text { Total } \\\text { Sales } & \$ 40000 & \$ 25000 & \$ 35000 & \$ 100000 \\\text { Cost of goods sold } & 26000 & \underline { 15000 } & \underline { 19000 } & \underline { 60000 } \\\text { Contribution margin } & 14000 & 10000 & 16000 & 40000 \\\text { Delivery and ordering costs } & 2000 & 3000 & 2000 & 7000 \\\text { Rent (per sq. metre used) } & 3000 & 3000 & 2000 & 8000 \\\text { Allocated corporate costs } & 5000 & 5000 & 5000 & 15000 \\\text { Corporate profit } & \$ 4000 & \$ 1000 ) & \$ 7000 & \$ 10000\end{array}$$
a.Do you recommend discontinuing the Chocolate-Lite product line? Why or why not?
b.If the Chocolate product line had been discontinued,corporate profits for the current year would have decreased by what amount?