A guitar manufacturer is considering eliminating its electric guitar division because its $76,000 expenses are higher than its $72,000 sales. The company reports the following expenses for this division. Cost of goods sold Direct expenses Indirect expenses Service department costs Electric Guitar Division is: Sales Expenses: Avoidable Expenses $ 56,000 9,250 470 6,000 Should the division be eliminated? (Any loss amount should be indicated with minus sign.) Total expenses Net income (loss) Revenues from electric guitar division Avoidable expenses Revenues are greater than (less than) Unavoidable Expenses Kept $1,250 1,600 1,430 Eliminated Prev 5 of 5 # Next >

A guitar manufacturer is considering eliminating its electric guitar division because its $76,000 expenses are higher than its $72,000 sales. The company reports the following expenses for this division. Cost of goods sold Direct expenses Indirect expenses Service department costs Electric Guitar Division is: Sales Expenses: Avoidable Expenses $ 56,000 9,250 470 6,000 Should the division be eliminated? (Any loss amount should be indicated with minus sign.) Total expenses Net income (loss) Revenues from electric guitar division Avoidable expenses Revenues are greater than (less than) Unavoidable Expenses Kept $1,250 1,600 1,430 Eliminated Prev 5 of 5 # Next >

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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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 $330,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 1,097, 600 784,000 313,600 376,000 $ (62,400) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be continued or eliminated?
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