Answer Current Business segment operations for Jolie, a mass retailer, are presented below: Total $855,000 $475,000 $220,000 $160,000 Sales Variable Costs Fixed Costs Operating income (Loss) A $160,000 B $220,000 C $200,000 D $180,000 6 Merchandise Automotive Restaurant $475,000 $285,000 $100,000 $90,000 Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued? $380,000 $190,000 $100,000 $20,000 $90,000 ($20,000)

Answer Current Business segment operations for Jolie, a mass retailer, are presented below: Total $855,000 $475,000 $220,000 $160,000 Sales Variable Costs Fixed Costs Operating income (Loss) A $160,000 B $220,000 C $200,000 D $180,000 6 Merchandise Automotive Restaurant $475,000 $285,000 $100,000 $90,000 Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current sales levels. What will Jolie's total operating income be if the Restaurant segment is discontinued? $380,000 $190,000 $100,000 $20,000 $90,000 ($20,000)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 26BEA

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