Question
The Congress Corporation has two divisions--senate and house. The divisions have the following revenues and expenses: senate house Sales $ 585,000 $ 473,000 Variable costs
The Congress Corporation has two divisions--senate and house. The divisions have the following revenues and expenses:
senate | house | |
Sales | $ 585,000 | $ 473,000 |
Variable costs | 174,000 | 228,300 |
Traceable fixed costs | 145,500 | 207,000 |
Allocated common corporate costs | 131,000 | 176,800 |
Net operating income (loss) | $ 134,500 | $ (139,100) |
The management of congress is considering the elimination of the house Division. If the house Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the house Division would result in an overall company net operating income (loss) of:
a.$(42,300) negative 42,300
b.$(4,600)
c.$134,500
d.$(139,100)
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