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he discontinuance of Department F w

he discontinuance of Department F w

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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A portion of the divisional income statement for the year just ended is presented below in a condensed form. Department F Net sales $93,800 Cost of goods sold 72,400 Gross profit $21,400 Operating expenses 28,900 Loss from operations $(7,500) The operating expenses of Department F include $16,000 for direct expenses. It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business. Assuming the accuracy of these estimates, determine the effect (increase or decrease and the amount) on the operating income of the business if Department F had been discontinued. X Decrease
Transcribed Image Text:A portion of the divisional income statement for the year just ended is presented below in a condensed form. Department F Net sales $93,800 Cost of goods sold 72,400 Gross profit $21,400 Operating expenses 28,900 Loss from operations $(7,500) The operating expenses of Department F include $16,000 for direct expenses. It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business. Assuming the accuracy of these estimates, determine the effect (increase or decrease and the amount) on the operating income of the business if Department F had been discontinued. X Decrease
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