A segment of a company reports the following loss for the year. All $140,000 of its variable costs are avoidable, and $75,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 200,000 140,000 60,000 80,000 (20,000) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below.
A segment of a company reports the following loss for the year. All $140,000 of its variable costs are avoidable, and $75,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 200,000 140,000 60,000 80,000 (20,000) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required A Required B
Should the segment be eliminated?
Should the segment be eliminated?
< Required A
Required B >
Transcribed Image Text:A segment of a company reports the following loss for the year. All $140,000 of its variable costs are avoidable, and $75,000 of its
fixed costs are avoidable.
Segment Income (Loss)
Sales
Variable costs
Contribution margin
Fixed costs
Income (loss)
(a) Compute the income increase or decrease from eliminating this segment.
(b) Should the segment be eliminated?
Required A
Complete this question by entering your answers in the tabs below.
Required B
$ 200,000
140,000
60,000
80,000
(20,000)
Segment Elimination Analysis
Compute the income increase or decrease from eliminating this segment.
Sales
Variable costs
Contribution margin
Fixed costs
Income (loss)
Continue
$ 200,000
140,000
60,000
80,000
(20,000)
$
Eliminate
< Required A
Income Increase
(Decrease)
Required B >
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