Market has three divisions (Chad, Talbot, and Heather) with the following information Chad Talbot Heather Total $60,000 $50,000 $40,000 $150,000 $35.000 $28.000 $30.000 $93.000 $25,000 $22.000 $10,000 $57.000 $5.500 $4.500 $6.500 $16.500 $19.500 $17.500 $3,500 $40,500 Segment Margin Less: Common Fixed Costs $11.000 $10.500 $6.000 $27.500 Net Operating Income (Loss) $8.500 $7.000 ($2.500 $13.000 Sales Revenue Var, cost CM Less: Direct Fixed Cost Now suppose that $4.000 of the common foxed costs could be avoided if the Heather division was eliminated. Now how much will Market's net operating income increase or decrease if Heather is eliminated? $500 Increase $500 decrease O$1.500 decrease 500 incre

Market has three divisions (Chad, Talbot, and Heather) with the following information Chad Talbot Heather Total $60,000 $50,000 $40,000 $150,000 $35.000 $28.000 $30.000 $93.000 $25,000 $22.000 $10,000 $57.000 $5.500 $4.500 $6.500 $16.500 $19.500 $17.500 $3,500 $40,500 Segment Margin Less: Common Fixed Costs $11.000 $10.500 $6.000 $27.500 Net Operating Income (Loss) $8.500 $7.000 ($2.500 $13.000 Sales Revenue Var, cost CM Less: Direct Fixed Cost Now suppose that $4.000 of the common foxed costs could be avoided if the Heather division was eliminated. Now how much will Market's net operating income increase or decrease if Heather is eliminated? $500 Increase $500 decrease O$1.500 decrease 500 incre

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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Question

Market has three divisions (Chad, Talbot, and Heather) with the following information:
Chad
Talbot Heather Total
$60,000 $50,000 $40,000 $150,000
$35.000 $28.000 $30.000 $93.000
$25,000 $22,000 $10,000 $57.000
$5.500 $4.500 $6.500 $16.500
Sales Revenue
Var, cost
CM
Less: Direct Fixed Cost
Segment Margin
$19.500 $17,500 $3,500 $40,500
Less: Common Fixed Costs
$11.000 $10.500 $6.000 $27.500
Net Operating Income (Loss) $8.500 $7.000 ($2.500) $13.000
Now suppose that $4,000 of the common foxed costs could be avoided if the Heather division was eliminated. Now how much
will Market's net operating income increase or decrease if Heather is eliminated?
$500 increase
O $500 decrease
$1.500 decrease
500 increase

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Step 1: Introduce to income statement

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Step 2: Working for total common fixed cost after elimination of heather department

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Step 3: Working for net operating income if heather is eliminated

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Step 4: Working for increase or decrease if heather division is eliminated

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Q35 Consider the following data for three divisions of a company, X, Y, and Z: Divisional: X Y Z Sales $ 1,483,000 $ 805,000 $ 5,005,000 Operating Income 216,100 59,700 263,800 Investment in assets 625,600 292,500 3,179,600 The return on sales (ROS) for Division Z is: (Round your percentages to one decimal place.) Multiple Choice 7.4%. 8.3%. 5.3%. 14.6%. 20.4%.
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