Answered step by step
Verified Expert Solution
Question
1 Approved Answer
GM operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below: Urban Rural Sales $ 320,000 $ 80,000 Variable expenses
GM operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below:
|
|
| Urban |
|
| Rural |
|
| Sales | $ | 320,000 |
| $ | 80,000 |
|
| Variable expenses |
| 208,000 |
|
| 56,000 |
|
| Contribution margin |
| 112,000 |
|
| 24,000 |
|
| Traceable fixed expenses |
| 48,000 |
|
| 30,000 |
|
| Segment margin | $ | 64,000 |
| $ | (6,000 | ) |
GM's common fixed expenses were $25,000 last year. If operations in the Rural Sales Territory would have been discontinued at the beginning of last year, how would this have changed the net operating income of GM as a whole?
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