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The operations of Smith Limited are divided into the WA Division and the SA Division. Projections for the next year are as follows: WA SA
The operations of Smith Limited are divided into the WA Division and the SA Division. Projections for the next year are as follows: WA SA Division Division Total Sales revenue $250,000 $180,000 $430,000 Variable expenses 90,000 100,000 190,000 Contribution margin $160,000 $ 80,000 $240,000 Direct fixed expenses 75,000 62,500 137,500 Segment margin $ 85,000 $ 17,500 $102,500 Allocated common costs 35,000 27,500 62,500 Total relevant benefit (loss) $ 50,000 $(10,000) $ 40,000 Operating income for Smith Limited as a whole if the SA Division were dropped would be Correct Answer $22,500 $40,000 $50,000 $60,000
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