Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Green Industries has two sales territories-East and West. Financial information for the two territories is presented below: East West Total Sales $980,000 $750,000 $1,730,000 Direct

Green Industries has two sales territories-East and West. Financial information for the two territories is presented below: East West Total Sales $980,000 $750,000 $1,730,000 Direct costs: Variable (343,000) (225,000) (568,000) Fixed (450,000) (325,000) (775,000) Allocated common costs (275,000) (175,000) (450,000) Net income (loss) $(88,000) $ 25,000 $(63,000) Because the company is in a start-up stage, corporate management feels that the East sales territory is creating too much of a cash drain on the company and it should be eliminated. If the East territory is discontinued, one sales manager (whose salary is $40,000 per year and is part of the fixed costs) will be relocated to the West territory. By how much would Green's income change if the East territory is eliminated? Recast the income statements in a format that provides information to support your

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Income Tax Fundamentals 2013

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

31st Edition

1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516

Students also viewed these Accounting questions