Question
Please show calculations to support your answer. 2) Bow Wow Corp. manufactures doggie beds. The super deluxe bed division showed the following results for last
Please show calculations to support your answer.
2) Bow Wow Corp. manufactures doggie beds. The super deluxe bed division showed the following results for last year:
Sales (10,000 beds) $150,000
Cost of Goods Sold 75,000
Direct admin expenses 50,000
Allocated admin expenses 40,000
Net Loss ($15,000)
Because of this net loss, Bow Wow is considering eliminating the super deluxe bed division. If they eliminate the division, none of the allocated admin expenses will be avoided. Other departments will have to absorb the cost. Should Bow Wow eliminate the division? Support your decision with calculations.
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