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Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below. Sales Segment Income (Loss) Variable costs Contribution margin Fixed costs Income (loss) $ 1,110,000 975,000 135,000 220,000 $ (85,000) If 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. Sales Segment Income (Loss) Variable costs Contribution margin Fixed costs Income (loss) $ 1,110,000 975,000 135,000 220,000 $ (85,000) If 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

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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Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below. Sales Segment Income (Loss) Variable costs Contribution margin Fixed costs Income (loss) $ 1,110,000 975,000 135,000 220,000 $ (85,000) If 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
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. Sales Segment Income (Loss) Variable costs Contribution margin Fixed costs Income (loss) $ 1,110,000 975,000 135,000 220,000 $ (85,000) If 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
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