ume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Department A $ 450,000 Total $ 800,000 320,000 480,000 $ 350,000 120,000 230,000 200,000 250,000 400,000 140,000 260,000 $ 80,000 $ 90,000 $ (10,000) ales ariable expenses ontribution margin ixed expenses et operating income (loss) company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the s in Department A will drop by 6%. What is the financial advantage (disadvantage) of discontinuing Department B? Multiple Choice $(133,800) $(128,000) $(113,800) Department B $(124,000)

ume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Department A $ 450,000 Total $ 800,000 320,000 480,000 $ 350,000 120,000 230,000 200,000 250,000 400,000 140,000 260,000 $ 80,000 $ 90,000 $ (10,000) ales ariable expenses ontribution margin ixed expenses et operating income (loss) company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the s in Department A will drop by 6%. What is the financial advantage (disadvantage) of discontinuing Department B? Multiple Choice $(133,800) $(128,000) $(113,800) Department B $(124,000)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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