Balding, Ltd. is composed of 5 divisions. Each division is allocated a share of the overhead of Balding to make divisional managers aware of the cost of running the corporate headquarters. The following information relates to the Metro Division: Sales $6,100,000 Variable Operating Costs $3,640,000 Traceable Fixed Operating Costs $1,560,000 Allocated Corporate Overhead $200,000If the Metro Division is closed, 100% of the traceable fixed operating costs can be eliminated. What will be the impact on the overall profitability of Balding if the Metro Division is closed? Select one: A. Decrease by $900,000 B. Decrease by $5,900,000 C. Decrease by $4,340,000 D. Decrease by $2,460,000 E. Decrease by $700,000

Balding, Ltd. is composed of 5 divisions. Each division is allocated a share of the overhead of Balding to make divisional managers aware of the cost of running the corporate headquarters. The following information relates to the Metro Division: Sales $6,100,000 Variable Operating Costs $3,640,000 Traceable Fixed Operating Costs $1,560,000 Allocated Corporate Overhead $200,000If the Metro Division is closed, 100% of the traceable fixed operating costs can be eliminated. What will be the impact on the overall profitability of Balding if the Metro Division is closed? Select one: A. Decrease by $900,000 B. Decrease by $5,900,000 C. Decrease by $4,340,000 D. Decrease by $2,460,000 E. Decrease by $700,000

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 7E: Columbia Products Inc. has two divisions, Salem and Seaside. For the month ended March 31, Salem had...

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Question

Sales	$6,100,000
Variable Operating Costs	$3,640,000
Traceable Fixed Operating Costs	$1,560,000
Allocated Corporate Overhead	$200,000

If the Metro Division is closed, 100% of the traceable fixed operating costs can be eliminated. What will be the impact on the overall profitability of Balding if the Metro Division is closed?

Select one:

Decrease by $900,000

Decrease by $5,900,000

Decrease by $4,340,000

Decrease by $2,460,000

Decrease by $700,000

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