KVHZUM123 Corporation has two departments, Toys and Candy. The company's most recent monthly contribution format Income statement follows: Sales Variable expenses Contribution Margin Fixed Expenses Net operating income (loss) Total Candy $4,200,000 $3,000,000 $1,200,000 2.000.000 1.500.000 500.000 2,200,000 1,500,000 700,000 2.200,000 1,300,000 200,000 (ID#79893) (Baruch College - No assistance allowed.) Multiple Choice 0 Department Toys A KVHZUM123's study indicates that $200,000 of the fixed expenses being charged to the Candy Department are sunk costs or allocated costs that will continue even if the Candy Department is dropped. In addition, the elimination of the Candy Departm will result in a 20% decrease in the sales of the Toys Department. Decrease by $260,000 900.000 (200,000) Q) If the Candy Department is dropped, what will be the effect on the net operating Income of the KVHZUM123 Corporation as a whole?
KVHZUM123 Corporation has two departments, Toys and Candy. The company's most recent monthly contribution format Income statement follows: Sales Variable expenses Contribution Margin Fixed Expenses Net operating income (loss) Total Candy $4,200,000 $3,000,000 $1,200,000 2.000.000 1.500.000 500.000 2,200,000 1,500,000 700,000 2.200,000 1,300,000 200,000 (ID#79893) (Baruch College - No assistance allowed.) Multiple Choice 0 Department Toys A KVHZUM123's study indicates that $200,000 of the fixed expenses being charged to the Candy Department are sunk costs or allocated costs that will continue even if the Candy Department is dropped. In addition, the elimination of the Candy Departm will result in a 20% decrease in the sales of the Toys Department. Decrease by $260,000 900.000 (200,000) Q) If the Candy Department is dropped, what will be the effect on the net operating Income of the KVHZUM123 Corporation as a whole?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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KVHZUM123 Corporation has two departments, Toys and Candy. The company's most recent monthly contribution format Income statement follows:
Sales
Varlable expenses
Contribution Margin
Fixed Expenses
Net operating Income (loss)
(ID#79893)
(Baruch College - No assistance allowed.)
Multiple Choice
Total
O
O
Candy
$4,200,000 $3,000,000 $1,200,000
2,000,000
1,500,000
500,000
2,200,000
1,500,000
700,000
2,200,000
1,300,000
900,000
(200,000)
200,000
Q) If the Candy Department is dropped, what will be the effect on the net operating Income of the KVHZUM123 Corporation as a whole?
O
A KVHZUM123's study indicates that $200,000 of the fixed expenses being charged to the Candy Department are sunk costs or allocated costs that will continue even if the Candy Department is dropped. In addition, the elimination of the Candy Department
will result in a 20% decrease in the sales of the Toys Department.
Decrease by $260,000
0
Increase by $340,000
Department
Toys
Decrease by $340,000
Decrease by $300,000
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