Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Sales Variable expenses Contribution margin
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $800,000 320,000 480.000 400,000 $ 80,000 Department A Department B $350,000 $450,000 120,000 200,000 230,000 250,000 140,000 260,000 $ 90,000 $(10,000) The company says that $140,000 of the fixed expenses being charged to Department Bare sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 8%. What is the financial advantage (disadvantage) of discontinuing Department B? Multiple Choice S(132,000) $(136,000) S(168,400) S(148,4001
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started