Carns Company is considering eliminating its Small Tools Division, which reported a loss for the Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 1,330,000 1,195,000 135,000 240,000 $ (105,000)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Carns Company is considering eliminating its Small Tools Division, which reported a loss for the prior year of $105,000 as shown below.
Segment Income (Loss)
Sales
Variable costs
Contribution margin
Fixed costs
Income (loss)
Multiple Choice
If the Small Tools Division is dropped, all of its variable costs are avoidable, and $108,000 of its fixed costs are avoidable. The impact on Carns's income from eliminating the Small Tools Division would be:
$56,400 decrease
$27,000 decrease
$240,000 decrease
$27,000 increase
$ 1,330,000
1,195,000
$108,000 decrease
135,000
240,000
$ (105,000)
Transcribed Image Text:Carns Company is considering eliminating its Small Tools Division, which reported a loss for the prior year of $105,000 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) Multiple Choice If the Small Tools Division is dropped, all of its variable costs are avoidable, and $108,000 of its fixed costs are avoidable. The impact on Carns's income from eliminating the Small Tools Division would be: $56,400 decrease $27,000 decrease $240,000 decrease $27,000 increase $ 1,330,000 1,195,000 $108,000 decrease 135,000 240,000 $ (105,000)
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