Harold Manufacturing has a division that is generating net losses year after year. Below is some financial information for this division: Sales $300,000 Cost of goods sold Gross profit Operating expenses Operating loss 210,000 70,000 115,000 (45,000) Harold estimates that 30% of the cost of goods sold amount is fixed factory overhead, and 10% of the operating expenses are fixed. If this division is eliminated, the fixed costs will not be materially affected. What is the income (cost) to Harold if he eliminates the division? a. amount $ type your answer... b. Income or cost? type your answer... c. Should Harold eliminate this division? yes, or no? type your answer...

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Harold Manufacturing has a division that is generating net losses year after year. Below is some financial information for this division:
Sales
$300,000
Cost of goods sold
Gross profit
Operating expenses
Operating loss
210,000
70,000
115,000
(45,000)
Harold estimates that 30% of the cost of goods sold amount is fixed factory overhead, and 10% of the operating expenses are fixed. If this division is eliminated, the fixed
costs will not be materially affected.
What is the income (cost) to Harold if he eliminates the division?
a. amount $ type your answer...
b. Income or cost? type your answer...
c. Should Harold eliminate this division? yes, or no? type your answer...
Transcribed Image Text:Harold Manufacturing has a division that is generating net losses year after year. Below is some financial information for this division: Sales $300,000 Cost of goods sold Gross profit Operating expenses Operating loss 210,000 70,000 115,000 (45,000) Harold estimates that 30% of the cost of goods sold amount is fixed factory overhead, and 10% of the operating expenses are fixed. If this division is eliminated, the fixed costs will not be materially affected. What is the income (cost) to Harold if he eliminates the division? a. amount $ type your answer... b. Income or cost? type your answer... c. Should Harold eliminate this division? yes, or no? type your answer...
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