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If the backpack division is dropped, all $475,000 of its variable costs are avoidable, and $223,200 of its fixed costs are avoidable. The impact on Costco's income from eliminating this business segment would be (increase should be entered as a positive number and decrease in income should be entered as a negative number, i.e. decrease of 2,200 should be entered as-2200):

If the backpack division is dropped, all $475,000 of its variable costs are avoidable, and $223,200 of its fixed costs are avoidable. The impact on Costco's income from eliminating this business segment would be (increase should be entered as a positive number and decrease in income should be entered as a negative number, i.e. decrease of 2,200 should be entered as-2200):

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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Costco Company is considering eliminating its backpack division, which reported a loss for the recent year of $52,000 as shown below. Segment Income (Loss) $ 955,000 475,000 Sales Variable costs Contribution margin Fixed costs 485,000 532,000 Income (loss) $ (52,000) If the backpack division is dropped, all $475,000 of its variable costs are avoidable, and $223,200 of its fixed costs are avoidable. The impact on Costco's income from eliminating this business segment would be (increase should be entered as a positive number and decrease in income should be entered as a negative number, i.e. decrease of 2,200 should be entered as-2200):
Transcribed Image Text:Costco Company is considering eliminating its backpack division, which reported a loss for the recent year of $52,000 as shown below. Segment Income (Loss) $ 955,000 475,000 Sales Variable costs Contribution margin Fixed costs 485,000 532,000 Income (loss) $ (52,000) If the backpack division is dropped, all $475,000 of its variable costs are avoidable, and $223,200 of its fixed costs are avoidable. The impact on Costco's income from eliminating this business segment would be (increase should be entered as a positive number and decrease in income should be entered as a negative number, i.e. decrease of 2,200 should be entered as-2200):
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