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Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $56,000 for the past year as shown below. Segment Income (Loss)
Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $56,000 for the past year as shown below. Segment Income (Loss) Sales $ 1,100,000 Variable costs 820,000 Contribution margin 280,000 Fixed costs 336,000 Income (loss) $ (56,000) the kitchen division is dropped, all $820,000 of its variable costs are avoidable, and $201600 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be $78,400 decrease O $280,000 increase O $290,400 decrease s $78,400 increase $280,000 decrease
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