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8 July, 14:01

Type your answer in the box. Jay's Furniture makes several types of furniture including couches and loveseats. Last year total contribution margin was $900,000 for couches and $350,000 for loveseats. Loveseats had a segment margin of $50,000 and common fixed costs of $100,000 so the company is considering stopping loveseat production. If that happens, sales of couches is expected to increase by 10%, The net impact of stopping production of loveseats will (increase/decrease) profits by $ Read about thia Do you know the answer? I know it Think so Unsure No idea

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  1. 8 July, 14:12
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    Increase profits by $40,000

    Explanation:

    The computation of the net impact of stopping production of love seats is shown below:

    = Contribution margin * increased percentage - segment margin

    = $900,000 * 10% - $50,000

    = $90,000 - $50,000

    = $40,000

    Since the amount comes in positive which means that the profits is increased by $40,000

    All other information which is given is not relevant. Hence, ignored it
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