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(a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated?

(a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 23-8 (Algo) Segment elimination LO P4 Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $322,500 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 1,068,200 763,000 305,200 367,000 $ (61,800) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Compute the income increase or decrease from eliminating this segment. Segment Elimination Continue Eliminate Income Increase (Decrease) Analysis Sales $ 1,068,200 S 322,500 X Variable costs ✓ 763,000 322,500X Contribution margin 305,200 0 Fixed costs 367,000 322,500 X Income (loss) $ (61,800) $ (322,500) $ (260,700) Required A Required B>
Transcribed Image Text:Exercise 23-8 (Algo) Segment elimination LO P4 Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $322,500 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 1,068,200 763,000 305,200 367,000 $ (61,800) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Compute the income increase or decrease from eliminating this segment. Segment Elimination Continue Eliminate Income Increase (Decrease) Analysis Sales $ 1,068,200 S 322,500 X Variable costs ✓ 763,000 322,500X Contribution margin 305,200 0 Fixed costs 367,000 322,500 X Income (loss) $ (61,800) $ (322,500) $ (260,700) Required A Required B>
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