Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line. Revenue from Barbecue Division sales Salaries for Barbecue Division workers $ 504,000 (104,000) Direct material (306,000) Sunk costs (equipment depreciation) Allocated company-wide facility-sustaining costs (76,000) (52,000) $ (34,000) Net loss If Barbecue Division were eliminated, profitability would Multiple Choice increase $24,000. increase $528,000.
Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line. Revenue from Barbecue Division sales Salaries for Barbecue Division workers $ 504,000 (104,000) Direct material (306,000) Sunk costs (equipment depreciation) Allocated company-wide facility-sustaining costs (76,000) (52,000) $ (34,000) Net loss If Barbecue Division were eliminated, profitability would Multiple Choice increase $24,000. increase $528,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
3rd option: decrease $94,000.
4th option: decrease $24,000.
Transcribed Image Text:Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line.
Revenue from Barbecue Division sales
Salaries for Barbecue Division workers
Direct material
$ 504,000
(104,000)
(306,000)
Sunk costs (equipment depreciation)
Allocated company-wide facility-sustaining costs
(76,000)
(52,000)
$ (34,000)
Net loss
If Barbecue Division were eliminated, profitability would
Multiple Choice
increase $24,000.
increase $528,000.
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