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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.
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