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Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supplys business segments. Assume
Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supplys business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated, but will be allocated to the two remaining segments.
Costumes | Party Supplies | Floral Decorations | |||
Sales | $159,000 | $109,000 | $209,000 | ||
Variable costs | 83,000 | 50,000 | 119,000 | ||
Contribution margin | $76,000 | $59,000 | $90,000 | ||
Direct fixed costs | 50,000 | 20,000 | 24,000 | ||
Allocated common fixed costs | 31,000 | 24,000 | 31,000 | ||
Net income | $(5,000) | $15,000 | $34,000 |
If costumes are dropped, what change will occur to profit?
Profit will by $.
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