Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin 1,110,000 975,000 135,000 220,000 $(85,000) Fixed costs Income (Loss) It the Windows division is dropped, all of its variable costs are avoidable, and $143.000 of its fixed costs are avoidable. The impact on Gion's operating income from eliminating this business segment would be Multiple Choice $7.200 decrease $8.000 increase $143.000 decrease $143.000 increase $8.000 decrease
Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin 1,110,000 975,000 135,000 220,000 $(85,000) Fixed costs Income (Loss) It the Windows division is dropped, all of its variable costs are avoidable, and $143.000 of its fixed costs are avoidable. The impact on Gion's operating income from eliminating this business segment would be Multiple Choice $7.200 decrease $8.000 increase $143.000 decrease $143.000 increase $8.000 decrease
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below.
Segment Income (Loss)
Sales
1,110,000
Variable costs
975,000
Contribution margin
135,000
220,000
Fixed costs
Income (Loss)
$(85,000)
It the Windows division is dropped, all of its variable costs are avoidable, and $143,000 of its fixed costs are avoidable. The impact on Gion's operating income from eliminating this business segment would be
Munple Choice
$7.200 decrease
$8.000 increase
$143.000 decrease
$143,000 increase
$8.000 decrease
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