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Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued?

Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued?

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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Current business segment operations for Jolie, a mass retailer, are presented below: Answer Sales Variable Costs Fixed Costs Operating income (Loss) A $160,000 B $220,000 C $200,000 D $180,000 Total $855,000 $475,000 $220,000 $160,000 Merchandise Automotive Restaurant $475,000 $285,000 $100,000 $90,000 $380,000 $190,000 $100,000 $20,000 $90,000 ($20,000) Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued?
Transcribed Image Text:Current business segment operations for Jolie, a mass retailer, are presented below: Answer Sales Variable Costs Fixed Costs Operating income (Loss) A $160,000 B $220,000 C $200,000 D $180,000 Total $855,000 $475,000 $220,000 $160,000 Merchandise Automotive Restaurant $475,000 $285,000 $100,000 $90,000 $380,000 $190,000 $100,000 $20,000 $90,000 ($20,000) Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued?
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