Question
The Dropinsky Company's management wants to determine if Segment B should be eliminated. The following data are available (in thousands). Segmented Income Statement Segment A
The Dropinsky Company's management wants to determine if Segment B should be eliminated. The following data are available (in thousands).
| Segmented Income Statement | ||||
|
| Segment A | Segment B | Segment C | Total |
| Sales | $250 | $ 225 | $350 | $825 |
| Less variable costs | 75 | 150 | 150 | 375 |
| Contribution margin | $175 | $ 75 | $200 | $450 |
| Less direct fixed costs | 75 | 80 | 95 | 250 |
| Segment margin | $ 100 | $ (05) | $105 | $200 |
| Less common fixed costs |
|
|
| 105 |
| Operating income |
|
|
| $ 95 |
Assuming all direct fixed costs of Segment B are avoidable, what would be the change in operating income if Segment B were eliminated?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Guidelines For Laboratory Quality Auditing
Authors: Donald C. Singer, Ronald P. Upton
1st Edition
0824787846, 978-0824787844
