Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $44,500 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 970,000 480,000 490,000 534, 500 $ (44,500) the backpack division is dropped, all $480,000 of its variable costs are avoidable, and $213,800 of its fixed costs are avoidable. The impact Granfield's income from eliminating this business segment would be:

Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $44,500 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 970,000 480,000 490,000 534, 500 $ (44,500) the backpack division is dropped, all $480,000 of its variable costs are avoidable, and $213,800 of its fixed costs are avoidable. The impact Granfield's income from eliminating this business segment would be:

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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A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 40% of the indirect fixed costs are avoidable. Based on this information, should the division be eliminated?
None
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