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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Balding, Ltd. is composed of 5 divisions. Each division is allocated a share of the
Sales | $6,100,000 |
Variable Operating Costs | $3,640,000 |
Traceable Fixed Operating Costs | $1,560,000 |
Allocated Corporate Overhead | $200,000 |
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
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