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

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

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