Liubovi, I'm glad this video helped you out! Just this last week I added 134 managerial accounting videos to my website. These will always be free of charge to view, and there will eventually be quizzes and exercises for you to test your knowledge as well. Thanks for watching! edspira.com/courses/managerial-accounting
Sounds good but that assumes you will sell more cars. Depending on how much crossover exists between these two markets, that might work, or you might end up losing money.
Well if there was a machine for the truck division and the truck division only. The asset would presumably be sold and the depreciation expense would go away. However, if it were for the truck and the auto division the depreciation expense would stay.
it is an irrelevant cost but in this situation, the $20000 cost will occur no matter what. So removing the trucks will remove its contribution to paying down some of the fixed costs.
by dropping trucks we saved fixed salary of 50000, how come we made 0 profit in the entity . i think it should be 50000 coz if we drop we also fire the trucks manager
your videos are the reason I am not going to fail my exam, thank you
Happy to hear that! I hope you ace the exam!
You probably still failed
I never got while self study this video brought me to light from dark many thanks
Awesome video, helped me a lot! Very easy to understand!
Liubovi,
I'm glad this video helped you out! Just this last week I added 134 managerial accounting videos to my website. These will always be free of charge to view, and there will eventually be quizzes and exercises for you to test your knowledge as well. Thanks for watching!
edspira.com/courses/managerial-accounting
OMG thanks for this clear discussion 😭
Your Video is very helpful, very easy to understand, and very clear. Tnx Tnx Tnx
simple and easy to understand. Thanks!
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I would get rid of the truck division then increase production of cars
Sounds good but that assumes you will sell more cars. Depending on how much crossover exists between these two markets, that might work, or you might end up losing money.
Thank you! It's very well explained.
Is dropping a product line the same as closure of a business unit?
thank you so much
Is it said that one of the most critical stages in product development is the product discontinuation phase?
This is awesome
Shouldn't the operating profit for cars be 30000 (50000-20000)
Great video. What about fixed cost with depreciation?
Well if there was a machine for the truck division and the truck division only. The asset would presumably be sold and the depreciation expense would go away. However, if it were for the truck and the auto division the depreciation expense would stay.
Great video.
It's really helpful
Wouldn't building rent be an irrelevant fixed cost though?
it is an irrelevant cost but in this situation, the $20000 cost will occur no matter what. So removing the trucks will remove its contribution to paying down some of the fixed costs.
why salary can be avoided? it is a fixed cost
If you get rid of the truck division, you get rid of the employees. No employees. No salary
50000-40000 how do u get zero ??
90,000 - 50,000 - 40,000 = 0
(Contribution margin) - (salaries) - (Building rent) = 0
by dropping trucks we saved fixed salary of 50000, how come we made 0 profit in the entity . i think it should
be 50000 coz if we drop we also fire the trucks manager
Yes I have the same doubt
2:47🤣🤣
Thank you so much