Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $41,000. The division sales for the year were $941,000 and the variable costs were $465,000. The fixed costs of the division were $517,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be: Multiple Choice $269,200 increase $476,000 decrease $206,800 increase. $269,200 decrease $476,000 increase
Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $41,000. The division sales for the year were $941,000 and the variable costs were $465,000. The fixed costs of the division were $517,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be: Multiple Choice $269,200 increase $476,000 decrease $206,800 increase. $269,200 decrease $476,000 increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $41,000. The division sales
for the year were $941,000 and the variable costs were $465,000. The fixed costs of the division were $517,000. If the backpack division is dropped,
40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment
would be:
Multiple Choice
$269,200 increase
$476,000 decrease
$206,800 increase.
$269,200 decrease
$476,000 increase
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