Question
A. You are the CEO of Maximus Inc., a very diversified, publicly traded firm. Your Chief Financial Officer provides you with the following financial information
A.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.
Income Statement (in thousands) Crab Cakes Rapid Service Cocoa VegasVideo TOTAL Restaurants Window Emporium Pinball Replacement Sales $ 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 $ ?,600 $ 2,900 $ 10,500 $22,000 Materials Allocated $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 4,000 overhead Net $ 3,400 $ (600) $ 2,100 $ (1,500) $ 3,400 contribution to protStep by Step Solution
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