3) Below is an absorption income statement for a division of a conglomerate: Sales $5,000,000 *COGS $3,800,000 Gross Profit $1,200,000 **SGA $1,500,000 NOI $ -300,000 ========= *Included in COGS are $220,000 of fixed COGS items including depreciation. **Included in SGA are $140,000 of fixed SGA expenses. The fixed costs will be allocated to other divisions if division is closed. Given the numerical presentation above should the firm close the division? Prepare a variable costing income statement to confirm your decision. Please explain why your decision is correct.

3) Below is an absorption income statement for a division of a conglomerate: Sales $5,000,000 *COGS $3,800,000 Gross Profit $1,200,000 **SGA $1,500,000 NOI $ -300,000 ========= *Included in COGS are $220,000 of fixed COGS items including depreciation. **Included in SGA are $140,000 of fixed SGA expenses. The fixed costs will be allocated to other divisions if division is closed. Given the numerical presentation above should the firm close the division? Prepare a variable costing income statement to confirm your decision. Please explain why your decision is correct.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 3PA: Macon Mills is a division of Bolin Products. Inc. During the most recent year, Macon had a net...

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