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CWB Inc. has two divisions, Almond and Oak. If the Oak division is eliminated, the common fixed costs are still not avoidable but the sales
CWB Inc. has two divisions, Almond and Oak. If the Oak division is eliminated, the common fixed costs are still not avoidable but the sales of the Almond division would increase by 10%. Following is the income statement for the previous year: Almond Oak Total Sales $499,000 $270,500 $769,500 Variable Costs 184,000 124,800 308,800 Contribution Margin 315,000 145,700 460,700 Fixed Costs 273,000 151,250 424,250 Profit $ 42,000 $ (5,550) $36,450 Out of the total fixed costs $ 424,250, $ 80,000 is for the common fixed costs and is allocated equally to the two divisions. What is the profit of CWB Inc. if the Oak division is dropped? (Show your calculation)
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