Question
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses: East West Sales $ 570,000 $ 467,500 Variable costs
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:
| East | West | |||||
| Sales | $ | 570,000 | $ | 467,500 | ||
| Variable costs | 226,000 | 222,800 | ||||
| Traceable fixed costs | 168,000 | 149,400 | ||||
| Allocated common corporate costs | 129,600 | 159,800 | ||||
| Net operating income (loss) | $ | 46,400 | $ | (64,500 | ) | |
The management of Cook is considering the elimination of the West Division. If the West 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 West Division would result in an overall company net operating income (loss) of:
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Intermediate Accounting
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
10th Edition
978-0324300987
