Sammy Company is considering eliminating its Commerclal division. The company allocates fixed costs based on division sales. If the Commercial diviesion is dropped, of ts vanatecosts are avoidable, and $101,00 0 of its fixed costs are avoldable. The impact on Sammy's operating Income from eliminating the commercial division would beGardenSalesFarmCommercial$ 680,000$ 923,000$ 695,000Variable costsContribution margin373,900415,000650,800306,100508,00044,200Fixed costs248,200336,500253,500Netincome (loss)57,900171,500(209,300)Multiple Choice$56,800 decrease$13,000 increase$39,000 increase$7,300 decrease25 650,800100508,00044,200253,500248,200income(loss)336,50046:2057,900171,500(209,300)Multiple Cholce$56,800 decrease$13,000 increase$39,000 increase$7,300 decrease$56,800 increase

Loss of contribution margin = $44,200 Fixed cost saved = $101,000

Sammy Company is considering eliminating Its Commercial division. The company allocates fixed costs based on division sales. If the Commercial divsion is dropped, costs are avoidable, and $101,00 0 of its fixed costs are avoidable. The impact on Sammy's operating Income from eliminating the commercial divison would be Sales Garden Farm Commercial $ 680,000 373,900 $ 923,000 $ 695,000 Variable costs 415,000 650,800 Contribution margin Fixed costs 306,100 248,200 508,000 44,200 336,500 253,500 Net income (loss) 57,900 171,500 (209,300) Multiple Choice $56,800 decrease $13,000 increase $39,000 increase $7,300 decrease

Sammy Company is considering eliminating Its Commercial division. The company allocates fixed costs based on division sales. If the Commercial divsion is dropped, costs are avoidable, and $101,00 0 of its fixed costs are avoidable. The impact on Sammy's operating Income from eliminating the commercial divison would be Sales Garden Farm Commercial $ 680,000 373,900 $ 923,000 $ 695,000 Variable costs 415,000 650,800 Contribution margin Fixed costs 306,100 248,200 508,000 44,200 336,500 253,500 Net income (loss) 57,900 171,500 (209,300) Multiple Choice $56,800 decrease $13,000 increase $39,000 increase $7,300 decrease

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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None
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