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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 Supply's business segments.
Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supply's 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. Sales Costumes $160,000 Party Supplies Floral Decorations $111,000 $211,000 Variable costs 84,000 49,000 119,000 Contribution margin $76,000 $62,000 $92,000 Direct fixed costs 50,000 19,000 26,000 Allocated common fixed costs 30,000 26,000 30,000 Net income $(4,000) $17,000 $37,000 If costumes are dropped, what change will occur to profit? Profit will decrease Feedback by $ Check My Work When choosing to eliminate the Costume segment, what would also be eliminated in terms of covering applicable costs for the business? Would eliminating the segment change the amount of total fixed costs?
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