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The operations of TimberLink Inc are made up of two divisions - Lumber and Sawdust. Projections for the new financial year are as follows: The
The operations of TimberLink Inc are made up of two divisions - Lumber and Sawdust. Projections for the new financial year are as follows: The direct fixed expenses are specific expenses incurred by the divisions. These expenses can be avoided if the division is dropped. Required: (a) Determine the operating income of TimberLink if the Sawdust Division is dropped. (7 marks) (b) Should the Sawdust Division be dropped? (2 marks)
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