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The Bash Company has two divisionsOffice and Home. The divisions have the following revenues and expenses: Total Office Home Sales 950,000 400,000 550,000 Variable costs
The Bash Company has two divisionsOffice and Home. The divisions have the following revenues and expenses: Total Office Home Sales 950,000 400,000 550,000 Variable costs (280,000) (230,000) (50,000) Contribution Margin 670,000 170,000 500,000 Direct fixed costs (250,000) (140,000) (110,000) Allocated corporate costs (150,000) (100,000) (50,000) Net income (loss) 270,000 (70,000) 340,000 The management at Bash is considering the elimination of the Office Division. If the Office Division were dropped, the division's direct fixed costs could be saved, but the total corporate costs for the company would remain at $150,000. Given these data, the impact on net income of dropping the Office division would be: a. $30,000 Increase c. $70,000 Increase b. $30,000 Decrease d. $70,000 Decrease
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