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)

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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The following information relates to Osceola Corporation for the past accounting period. Service Department A Service Department B Producing Department C Producing Department D Proportion of service by A to: 10% 60% 30% BUD C Proportion of service by B to: 30% 20% 50% RUD A с Using the reciprocal (simultaneous solution) method, Department A's cost allocated to Department C (rounded to the nearest whole dollar) is: Multiple Choice $76,800 Direct costs $110,000 70,600 28,200 28,600 $81,142. $66,000. $116,000
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Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Total Department A Department B $ 800,000 350,000 450,000 $ 350,000 250,000 Sales $ 450,000 Variable expenses Contribution margin 100,000 100,000 350,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 50,000 $ (40,000) $ 90,000 The company says that $60,000 of the fixed expenses being charged to Department A are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department A is discontinued the sales in Department B will drop by 18%. What is the financial advantage (disadvantage) of discontinuing Department A? Multiple Choice $(103,000) $(83,000) $(92,000) $(101,000)
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