Carla Vista Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $33000 per year. The fixed costs charged to the department total $39000. $17000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? O $39000 decrease O $16000 decrease O $22000 increase O $17000 increase

Carla Vista Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $33000 per year. The fixed costs charged to the department total $39000. $17000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? O $39000 decrease O $16000 decrease O $22000 increase O $17000 increase

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Please help me
A $63,000 machine with a 6-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $91,000, with a 10-year class life. The new machine will not increase sales, but will decrease operating costs by $7,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the incremental annual cash flow associated with the project?
Please show excel work
At Frank's Nursery a proposed project with a cost of $3,000,000 hasa calculated NPV of $101.50. Based on this what should the company do with the proposed project? Reject the project Accept the project Nothing can be determined since the payback period is not known
[The following information applies to the questions displayed below.] Astro Co. sold 19,200 units of its only product and incurred a $43,072 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $142,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 $704,640 563,712 Sales Variable costs Contribution margin Fixed costs 140,928 184,000 Net loss $ (43,072) Required: . Compute the break-even point in dollar sales for 2019. (Round your answers to 2 decimal places.) Contribution Margin Per Unit Current Year $ 0.00 Contribution Margin Ratio Choose Numerator: Choose Denominator: Contribution Margin Ratio Contribution margin ratio…
A company with $795,000 in operating assets is considering the purchase of a machine that costs $85,000 and which is expected to reduce operating costs by $17,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Cholce 5 years 9.4 years 0.2 years 46.8 years
Granfield company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42700. The division sales for the year were $973300 and the variable costs were $482000. The fixed costs of the division were $534000. If the backpack division dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on granfield operating income for eliminating this business segment would be?
Wildhorse Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $46000 per year. The fixed costs charged to the department total $49000, $30000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? $49000 decrease $30000 increase $16000 decrease O $19000 increase Save for Later Attempts: 0 of 1 used Submit Answer
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice ($10,000) $10,000 ($50,000) $50,000 Next
Lafayette Corp. is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $6,000. The division sales for the year were $1,044,000 and the variable costs were $863,000. The fixed costs of the division were $187,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be: Multiple Choice $181,000 decrease $181,000 increase $124,900 decrease $56,100 decrease $50,100 decrease
A CNC mill was purchased 4 years ago for $50,000. The current market value is $26,000, which will decline as follows over the next 5 years: $20,000, $16,250, $ 14,000, $12,000, and $8500. The O&M costs are estimated to be $6000 this year. These costs are expected to increase by $2000 per year starting year 2. MARR = 10% The marginal cost for defender in year 2 Group of answer choices $13,750 $ is 14,600 $ 13,875 $15,400 $12,400
The Carter Corporation, a firm in the 25% marginal tax bracket, with a 15% required rate of return or discount rate, is considering a new project. This project involves the introduction of a new product. This product is expected to last 5 years and then, because it is somewhat of a fad product, it will be terminated. Cost of new plant and equipment:$380,000,000 Shipping and installation costs: 20,000,000 Unit sales: YearUnits Sold 1 2,000,000 2 2,000,000 3 2,000,000 4 1,500,000 5 1,500,000 Sales price per unit: $800/unit in years 1-3 and $600/unit in years 4 and 5 Variable cost per unit: $400/unit throughout the five years Annual fixed costs: $250,000,000 There will be an initial working capital requirement of $2,000,000 just to get production started. At the conclusion of the project, the plant and equipment can be sold for $100,000,000. The plant and equipment will be depreciated over five years on a straight-line basis to a zero-salvage value. Required: a)…