Answered: Sales $200,000 Varlable costs.....…

Business

Accounting

Sales $200,000 Varlable costs..... Fixed costs 145,000 Direct 30,000 Indirect.. 50,000 Operating loss. $(25,000)

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

A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 40% of the indirect fixed costs are avoidable. Based on this information, should the division be eliminated?

Sales
$200,000
Varlable costs.....
Fixed costs
145,000
Direct
30,000
Indirect..
50,000
Operating loss.
$(25,000)

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