Lake Corporation is considering the elimination of one of its segments. The segment incurs the following fixed costs. If the segment is eliminated, the building it uses will be sold. Advertising expense Supervisory salaries Allocation of companywide facility-level costs Original cost of building Book value of building Market value of building Maintenance costs on equinment Real estate taxes on building $140,000 зее, еее 130, 000 220,000 100, 000 160, 000 112, 000 12, 000 Required Determine the amount of avoidable cost associated with the segment. Avoidable cost

Lake Corporation is considering the elimination of one of its segments. The segment incurs the following fixed costs. If the segment is eliminated, the building it uses will be sold. Advertising expense Supervisory salaries Allocation of companywide facility-level costs Original cost of building Book value of building Market value of building Maintenance costs on equinment Real estate taxes on building $140,000 зее, еее 130, 000 220,000 100, 000 160, 000 112, 000 12, 000 Required Determine the amount of avoidable cost associated with the segment. Avoidable cost

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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Wildhorse Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $46000 per year. The fixed costs charged to the department total $49000, $30000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? $49000 decrease $30000 increase $16000 decrease O $19000 increase Save for Later Attempts: 0 of 1 used Submit Answer
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