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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Can you help me with the Incremental Analysis Drill #5?
E 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?
Transcribed Image Text:E 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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