Answer Current Business segment operations for Jolie, a mass retailer, are presented below: Total $855,000 $475,000 $220,000 $160,000 Sales Variable Costs Fixed Costs Operating income (Loss) A $160,000 B $220,000 C $200,000 D $180,000 6 Merchandise Automotive Restaurant $475,000 $285,000 $100,000 $90,000 Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued? $380,000 $190,000 $100,000 $20,000 $90,000 ($20,000)
Answer Current Business segment operations for Jolie, a mass retailer, are presented below: Total $855,000 $475,000 $220,000 $160,000 Sales Variable Costs Fixed Costs Operating income (Loss) A $160,000 B $220,000 C $200,000 D $180,000 6 Merchandise Automotive Restaurant $475,000 $285,000 $100,000 $90,000 Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued? $380,000 $190,000 $100,000 $20,000 $90,000 ($20,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject: accounting
Transcribed Image Text:Answer
Current business segment operations for Jolie, a mass retailer, are presented below:
Total
$855,000
Sales
Variable Costs
Fixed Costs
Operating income (Loss)
A $160,000
B $220,000
C $200,000
D $180,000
6
$475,000
$220,000
$160,000
Merchandise Automotive Restaurant
$475,000
$285,000
$100,000
$90,000
Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed
costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income
be if the Restaurant segment is discontinued?
$380,000
$190,000
$100,000 $20,000
$90,000 ($20,000)
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