AP&P is considering eliminating its web design division because it is not profitable. Below is the income statement. Sales Variable Costs Contribution Margin Fixed Costs Net Income $100,000 40,000 60,000 100,000 $(40,000) If the division is eliminated, 30% of the fixed costs will be allocated to other divisions and 70% will be eliminated. What will be the overall impact on net income for the company if the division is eliminated?
AP&P is considering eliminating its web design division because it is not profitable. Below is the income statement. Sales Variable Costs Contribution Margin Fixed Costs Net Income $100,000 40,000 60,000 100,000 $(40,000) If the division is eliminated, 30% of the fixed costs will be allocated to other divisions and 70% will be eliminated. What will be the overall impact on net income for the company if the division is eliminated?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Can you help me with the Incremental Analysis Drill #5?
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Incremental Analysis Drill #5
AP&P is considering eliminating its web design division because it is
not profitable. Below is the income statement.
Sales
Variable Costs
Contribution Margin
Fixed Costs
Net Income
$100,000
40,000
60,000
100,000
$(40,000)
If the division is eliminated, 30% of the fixed costs will be allocated to
other divisions and 70% will be eliminated. What will be the overall
impact on net income for the company if the division is eliminated?
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