Question
Stone Works is a company that sells tile. It has three profit centers: ceramic, stone and granite. Below is financial information for the three centers
Stone Works is a company that sells tile. It has three profit centers: ceramic, stone and granite. Below is financial information for the three centers for the year.
| Ceramic | Stone | Granite |
Revenue | $100,000 | $125,000 | $150,000 |
Variable costs as a percentage of sales | 40% | 60% | 64% |
Fixed costs: |
|
|
|
Costs unique to the profit center | 30,000 | 45,000 | 64,000 |
Costs allocated by the retail store | 6,000 | 7,000 | 8,000 |
Which ONE of the following statements is TRUE?
Assuming that these data are reliable, both the Stone and the Granite Divisions should be closed. Assuming that these data are reliable, only the Stone Division should be closed. Assuming that these data are reliable, none of the three divisions should be closed. Assuming that these data are reliable, only the Granite Division should be closed. Assuming that these data are reliable, only the Ceramic Division should be closed. |
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