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Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $59,000 for the past year as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $1,150,000 857,000 293,000 352,000 $(59,000) If the kitchen division is dropped, all $857,000 of its variable costs are avoidable, and $211,200 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be

Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $59,000 for the past year as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $1,150,000 857,000 293,000 352,000 $(59,000) If the kitchen division is dropped, all $857,000 of its variable costs are avoidable, and $211,200 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be

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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Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $59,000 for the past year as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $1,150,000 857,000 293,000 352,000 $(59,000) A If the kitchen division is dropped, all $857,000 of its variable costs are avoidable, and $211,200 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be
Transcribed Image Text:Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $59,000 for the past year as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $1,150,000 857,000 293,000 352,000 $(59,000) A If the kitchen division is dropped, all $857,000 of its variable costs are avoidable, and $211,200 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be
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