Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lux Company operates three departments within its store and has the following information. Dept A Dept B Dept C Total Sales revenue 150,000 90,000 60,000

Lux Company operates three departments within its store and has the following information.

Dept A Dept B Dept C Total
Sales revenue 150,000 90,000 60,000 300,000
Variable Costs 90,000 45,000 42,000 177,000
Fixed Costs (Allocated) 50,000 40,000 30,000 120,000
Income (Loss) 10,000 5,000 (12,000) 3,000

If Department C is eliminated, sales in Departments A & B will each decrease by 10% and $25,000 of the fixed costs allocated to Department C can be eliminated.

What is the increase or decrease in the company's net income if Department C is eliminated? If it is a decrease use a negative sign.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

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

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

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

Management Accounting A Business Planning Approach

Authors: Noah P. Barsky, Jr. Anthony H. Catanach

2nd Edition

1516506286, 978-1516506286

More Books

Students also viewed these Accounting questions

Question

which pin on a midi keyboard connects to the ground wire

Answered: 1 week ago