Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(10) Congratulations!You are the CEO of Maximus Inc., a very diversified, publicly traded firm. Your Chief Financial Officer provides you with the following financial information

  1. (10) Congratulations!You are the CEO of Maximus Inc., a very diversified, publicly traded firm. Your Chief Financial Officer provides you with the following financial information for the most recent month. He expects the numbers (in thousands) to remand unchanged going into the future. The Chief Financial Officer reports that your central office costs $4,000 (in thousands) dollars per month in overhead regardless of the number of divisions within Maximus. Every division is independent of the other so elimination of one or more divisions will not affect the remaining division's sales and variable costs. You face the tough task of determining which divisions to eliminate and which divisions to keep. Clearly explain your decision and reasoning to your board of directors.

image text in transcribed
Income Statement (in thousands) Crab Cakes Rapid Service Cocoa VegasVideo TOTAL Restaurants Window Emporium Pinball Replacement Sales 35 10,000 $ 12,000 $ 9.000 $ 19,000 $50,000 Less: Wages and $ 4.600 $ 4.000 $ 3.000 $ 9,000 $20,600 Salaries Costof $ 1.000 $ 7.600 $ 2.900 $ 10,500 $22,000 Materials Allocated $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 4.000 overhead Net 35 3.400 $ (600) $ 2.100 $ (1.500) $ 3.400 contribution to prot

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Law and the Legal Environment

Authors: Jeffrey F. Beatty, Susan S. Samuelson, Patricia Sanchez Abril

8th edition

1337404667, 1337404662, 9781337404532, 1337404535, 978-1337736954

Students also viewed these Economics questions