Question
Lucas Inc. has two divisions, Newcastle and Sydney. Following is the income statement for the previous year: Newcaste Sydney Total Sales $560,000 $336,000 $896,000 Variable
Lucas Inc. has two divisions, Newcastle and Sydney. Following is the income statement for the previous year:
| Newcaste | Sydney | Total | |
| Sales | $560,000 | $336,000 | $896,000 |
| Variable Costs | 176,000 | 164,000 | 340,000 |
| Contribution Margin | 384,000 | 172,000 | 556,000 |
| Fixed Costs (allocated) | 284,375 | 180,625 | 465,000 |
| Profit Margin | $99,625 | ($8,625) | $91,000 |
What would Lucas profit margin be if the Sydney division was dropped and all fixed costs are unavoidable?
| A. | $99,625 profit | |
| B. | $91,000 profit | |
| C. | $81,000 loss | |
| D. | $71,000 loss |
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CLEP Financial Accounting Study Guide
Authors: Passyourclass
1st Edition
1614330115, 978-1614330110
