Homework Help is Here – Start Your Trial Now!
Business
Accounting
Youngstown Construction plans to

Youngstown Construction plans to

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
**Question 12: Analysis of Discontinuing a Business Segment** **Context:** Youngstown Construction is considering discontinuing its roofing segment. The previous year, the segment achieved a contribution margin of $65,000 but had fixed costs amounting to $70,000. Discontinuation would allow the company to eliminate half of these fixed costs. **Question:** What impact will discontinuing the segment have on the company’s overall profit? **Options:** A. a decrease of $5,000 B. a decrease of $30,000 C. a decrease of $5,000 D. an increase of $30,000 **Explanation:** - **Contribution Margin:** $65,000 - **Fixed Costs:** $70,000 - **Avoidable Fixed Costs (50% of $70,000):** $35,000 The expected effect on the company’s overall profit needs to be calculated based on these figures.
Transcribed Image Text:**Question 12: Analysis of Discontinuing a Business Segment** **Context:** Youngstown Construction is considering discontinuing its roofing segment. The previous year, the segment achieved a contribution margin of $65,000 but had fixed costs amounting to $70,000. Discontinuation would allow the company to eliminate half of these fixed costs. **Question:** What impact will discontinuing the segment have on the company’s overall profit? **Options:** A. a decrease of $5,000 B. a decrease of $30,000 C. a decrease of $5,000 D. an increase of $30,000 **Explanation:** - **Contribution Margin:** $65,000 - **Fixed Costs:** $70,000 - **Avoidable Fixed Costs (50% of $70,000):** $35,000 The expected effect on the company’s overall profit needs to be calculated based on these figures.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Industry Specific Activities
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS