Acme Company has two divisions, East Division and West Division. Here are data regarding the current year: East Division West Division Sales revenue $560,000 $478,500 Variable costs 192,000 247,500 Contribution margin $368,000 $231,000 Traceable fixed costs 153,000 162,000 Segment margin $215,000 $69.000 Segment margin ratio 38.4% 14.4% Acme plans to discontinue the West Division. If the division is eliminated, 75% of its traceable fixed costs are avoidable. The remaining 25% are sunk costs. Acme's common fixed costs are $306,700. What would Acme's operating income (loss) be if it eliminates the West Division? $215,000 $(132,200) O $(91,700) $(22,700)
Acme Company has two divisions, East Division and West Division. Here are data regarding the current year: East Division West Division Sales revenue $560,000 $478,500 Variable costs 192,000 247,500 Contribution margin $368,000 $231,000 Traceable fixed costs 153,000 162,000 Segment margin $215,000 $69.000 Segment margin ratio 38.4% 14.4% Acme plans to discontinue the West Division. If the division is eliminated, 75% of its traceable fixed costs are avoidable. The remaining 25% are sunk costs. Acme's common fixed costs are $306,700. What would Acme's operating income (loss) be if it eliminates the West Division? $215,000 $(132,200) O $(91,700) $(22,700)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Transcribed Image Text:Acme Company has two divisions, East Division and West Division.
Here are data regarding the current year:
East Division
West Division
Sales revenue
$560,000
$478,500
Variable costs
192,000
247,500
Contribution margin
$368,000
$231,000
Traceable fixed costs
153,000
162,000
Segment margin
$215,000
$69.000
Segment margin ratio
38.4%
14.4%
Acme plans to discontinue the West Division. If the division is
eliminated, 75% of its traceable fixed costs are avoidable. The
remaining 25% are sunk costs. Acme's common fixed costs are
$306,700. What would Acme's operating income (loss) be if it
eliminates the West Division?
$215,000
$(132,200)
O $(91,700)
$(22,700)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education