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Skysong's two divisions, Wild and West, have been competing since the company began 2 0 years ago. Managers in the Wild division generated the top
Skysong's two divisions, Wild and West, have been competing since the company began years ago. Managers in the Wild division
generated the top sales for the first years, while the West division has been the sales leader for the last years. For the past
years, the Wild division has shown an operating loss. As a result, management is considering closing down the Wild division and
operating with just one division going forward. Projected amounts for the Wild division this year include sales of $ variable
costs of $ and total fixed costs of $ Of the total fixed costs, $ will continue whether the division is dropped or
not; the remaining $ is for supervisor salaries, positions that would be eliminated.
How much of the Wild division's fixed costs are direct versus allocated?
Should Skysong close the division?
Segment margin $
Skysong
close the Wild division.
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