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Division A1 were eliminated, NUBD's income wo

Division A1 were eliminated, NUBD's income wo

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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If Division A1 were eliminated, NUBD's income would * . Do not use money sign. Sample format: 11,111 or (11,111) NUBDCompany has 3 divisions: A1, B2, and C3. Division A1's income statement shows the following for the year ended December 31: Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Net loss P1,000,000 (800,000) P 200,000 P100,000 250,000 (350,000) P (150.000) Cost of goods sold is 70 percent variable and 20 percent fixed. Of the fixed costs, 60 percent are avoidable if the division is closed. All of the selling expenses relate to the division and would be eliminated if Division A1 were eliminated. Of the administrative expenses, 90 percent are applied from corporate costs.
Transcribed Image Text:If Division A1 were eliminated, NUBD's income would * . Do not use money sign. Sample format: 11,111 or (11,111) NUBDCompany has 3 divisions: A1, B2, and C3. Division A1's income statement shows the following for the year ended December 31: Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Net loss P1,000,000 (800,000) P 200,000 P100,000 250,000 (350,000) P (150.000) Cost of goods sold is 70 percent variable and 20 percent fixed. Of the fixed costs, 60 percent are avoidable if the division is closed. All of the selling expenses relate to the division and would be eliminated if Division A1 were eliminated. Of the administrative expenses, 90 percent are applied from corporate costs.
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