Question
A company has three locations. The income statements for the most recent accounting period are shown below: Avon Berlin Portland Sales $750,000 $220,000 $700,000 Variable
A company has three locations. The income statements for the most recent accounting period are shown below:
| Avon | Berlin | Portland | |
| Sales | $750,000 | $220,000 | $700,000 |
| Variable costs | $450,000 | $165,000 | $420,000 |
| Contribution Margin | $300,000 | $55,000 | $280,000 |
| Traceable(direct) Fixed Costs | $60,000 | $17,600 | $56,000 |
| Allocated Fixed costs | $165,000 | $48,400 | $154,000 |
| Operating Income | $75,000 | ($11,000) | $70,000 |
If the Berlin location closes 70% of the Berlin business will go to the Avon location. The Avon locations traceable (direct) fixed costs will increase by $12,000. if they take over the Berlin business.
Given these assumptions, what is the financial impact for the company as a whole if Berlin is eliminated. In addition, does the financial impact increase or decrease the operating income?
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Stand Up To The IRS How To Handle Audits Tax Bills And Tax Court
Authors: Frederick W. Daily Robin Leonard
2nd Edition
0873372409, 978-0873372404
