Question
A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 40%
A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 40% of the indirect fixed costs are avoidable. Based on this information, should the division be eliminated?
| Sales | $ | 270,000 | |
| Variable costs | 149,000 | ||
| Fixed costs | |||
| Direct | 36,000 | ||
| Indirect | 52,000 | ||
| Operating loss | $ | (33,000 | ) |
1-a. Compare the amounts of total revenues and total avoidable expenses. 1-b. Based on this information, should the division be eliminated?
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Financial and Managerial Accounting
Authors: Horngren, Harrison, Oliver
3rd Edition
978-0132497992, 132913771, 132497972, 132497999, 9780132913775, 978-0132497978
