ACE-272 Inc. has a shoes and a shits division. The company reported the following segmented income statement for last month Sales Variable expenses Contribution Margin Foed Expenses Net operating income foss) Multiple Choice The company predicts that $300,000 of the fixed expenses being charged to the Sharts Division are allocated costs that will continue even if the Shirts Ovision is eliminated. The elimination of the Shirts Division will additionally cause a 30% drop in Shoes Division sales if the company shuts down its Shirts Division, by how much will the company's overall net operating income change? O Division Total Shirts Shoes $3.000.000 $1.200.000 $4,200,000 2.000.000 1.500.000 500,000 2.200,000 1.500.000 700,000 900000 2200000 1.300.000 200,000 (200,000) O Increase by $580.000 Decrease by $550,000 Increase by $490,000 0 Decrease by $580,000
ACE-272 Inc. has a shoes and a shits division. The company reported the following segmented income statement for last month Sales Variable expenses Contribution Margin Foed Expenses Net operating income foss) Multiple Choice The company predicts that $300,000 of the fixed expenses being charged to the Sharts Division are allocated costs that will continue even if the Shirts Ovision is eliminated. The elimination of the Shirts Division will additionally cause a 30% drop in Shoes Division sales if the company shuts down its Shirts Division, by how much will the company's overall net operating income change? O Division Total Shirts Shoes $3.000.000 $1.200.000 $4,200,000 2.000.000 1.500.000 500,000 2.200,000 1.500.000 700,000 900000 2200000 1.300.000 200,000 (200,000) O Increase by $580.000 Decrease by $550,000 Increase by $490,000 0 Decrease by $580,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Subject :- Accounting
Transcribed Image Text:ACE-272 Inc. has a shoes and a shirts division. The company reported the following segmented income statement for last month
Sales
Variable expenses
Contribution Margin
Fixed Expenses
Net operating income (os)
Multiple Choice
Total
Shoes
Shirts
$4,200,000 $3,000,000 $1,200,000
2,000,000 1.500.000 500.000
2,200,000
1500.000
700,000
2.200.000
1.300.000
900.000
200,000
(200,000)
The company predicts that $300,000 of the fixed expenses being charged to the Shirts Division are allocated costs that will continue even if the Shorts Division is eliminated. The elimination of the
Shirts Division will additionally cause a 30% drop in Shoes Division sales if the company shuts down its Shirts Division, by how much will the company's overall net operating income change?
Increase by $580.000
Decrease by $550,000
Increase by $490,000
Division
0
Decrease by $580,000
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