An international company has the following profitability analysis of its three divisions: Division A Division B Division C $ 5,000,000 $ 10,000,000 $ 3,000,000 Revenues Commissions (1,000,000) (2,000,000 ) (600,000 ) Payments (3,000,000 ) (7,300,000 ) (2,000,000 ) Common (500,000 ) (500,000 ) (500,000 ) Costs Profit $ 500,000 $ 200,000 $ (100,000 ) The common costs are fixed, are distributed equally among the divisions, and are not avoidable if one of the divisions is dropped (they will be reallocated to the remaining divisions). What is the profitability of the remaining services if all services with losses are dropped (enter negative sign before number for loss)? Assume that at least one division has to continue if the company has to be in existence.

An international company has the following profitability analysis of its three divisions: Division A Division B Division C $ 5,000,000 $ 10,000,000 $ 3,000,000 Revenues Commissions (1,000,000) (2,000,000 ) (600,000 ) Payments (3,000,000 ) (7,300,000 ) (2,000,000 ) Common (500,000 ) (500,000 ) (500,000 ) Costs Profit $ 500,000 $ 200,000 $ (100,000 ) The common costs are fixed, are distributed equally among the divisions, and are not avoidable if one of the divisions is dropped (they will be reallocated to the remaining divisions). What is the profitability of the remaining services if all services with losses are dropped (enter negative sign before number for loss)? Assume that at least one division has to continue if the company has to be in existence.

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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