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6. A business segment has the following data: Sales Revenue $154,000 Cost of Goods Sold (expense) Sales and Admin expense 144,000 80,000 Cost of
6. A business segment has the following data: Sales Revenue $154,000 Cost of Goods Sold (expense) Sales and Admin expense 144,000 80,000 Cost of Goods Sold is 18% fixed cost, and variable "Sales and Admin expense" is 14% of Sales Revenue. Calculate the total effect on net income if this business segment is discontinued, assuming fixed costs are unaffected by the decision. 7. Ventura Trucking Co. is considering the replacement of an old refrigerator trailer with a new one. The following data is provided: Old Trailer New Trailer Book Value $40,000 n/a n/a New Trailer Purchase Cost $220,000 Annual operating costs $63,000 per yr. yr. Useful Life 9 years 9 years Residual Value zero zero $40,000 per If the old trailer is replaced, it can be sold for $19,000. Calculate the increase or decrease in Net Income for nine years if the old trailer is replaced by the new trailer.
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