Apple Inc. iPod Division has the following information: Sales $6,000,000 Variable costs 3,000,000 Fixed costs 4,000,000 If this division is eliminated, the fixed costs will be allocated to the company's other divisions. What is the incremental effect on net income if the division is dropped? Select one: a. $3,000,000 increase O b. $3,000,000 decrease c. $1,000,000 decrease O d. $1,000,000 increase
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- ABC Company is considering eliminating its parts division as a result of its current operating performance: Sales = $40,000; Variable expenses = $20,000; Contribution margin = $20,000; Fixed expenses = $23,000; Operating income = $(3,000). ABC determines that $15,000 of the $23,000 fixed expenses are direct fixed expenses to the parts division. If ABC Company eliminates the parts division, ABC's total operating income wilA company has three product lines, one of which reflects the following results: Sales $215,000 Variable expenses 125,000 Contribution margin 90,000 Fixed expenses 130,000 Net loss $ (40,000) If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company’s net income will Group of answer choices decrease by $12,000. increase by $40,000. decrease by $90,000. increase by $12,000.Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped, $100,000 of the fixed costs allocated to it could be eliminated. The impact on Sammy’s operating income from eliminating the commercial division would be: Garden Farm Commercial Sales $ 678,000 $ 920,000 $ 692,000 Variable costs 372,900 414,000 649,800 Contribution margin 305,100 506,000 42,200 Fixed costs 247,200 335,500 252,400 Net income (loss) 57,900 170,500 (210,200 )
- The management of Your Corporation is considering dropping a product. Data from the company's accounting system appear below: Sales $40,000 VC $15,000 Fixed manufacturing costs $19,000 Fixed selling and administrative costs $11,000 Investigation has revealed that $11,700 of the fixed manufacturing expenses and $6,300 of the fixed selling and administrative expenses will go away if the product is discontinued. What would be the effect on the company's overall net operating income if this product is dropped? Group of answer choices decrease by $7,000 increase by $7,000 increase by $13,000 decreased by $25,000 decreased by $13,000Jake Company has three product lines, one of which has the following results: Sales P215,000 Variable expenses 125,000 Contribution margin 90,000 Fixed expenses 130,000 Net loss P (40,000) If this product line is eliminated, 60% of the fixed expenses will be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, how much will the company's net income or loss be?14. A company operates with two departments: Department AA and Department BB. The manager is considering to drop Department BB because of the income statement prepared by the bookkeeper shown below: Dept. AA Dept. BB Sales P3,000,000 P1,000,000 Less: Variable costs 900,000 400,000 Contribution Margin 2,100,000 600,000 Less: Total Fixed costs 1,400,000 800,000 Operating Profit/(loss) P 700,000 (P200,000) Of the total fixed costs, P350,000 allocated to Det. BB is considered ass sunk cost. In, addition if Dept. BB will be eliminated 10% decrease of sales in Dept. AA will occur. a. What is the segment margin of Department BB? b. If Dept. BB will be dropped, what will be the amount of operating income of the company?
- 14. A company operates with two departments: Department AA and Department BB. The manager is considering to drop Department BB because of the income statement prepared by the bookkeeper shown below: Dept. AA Dept. BB Sales P3,000,000 P1,000,000 Less: Variable costs 900,000 400,000 Contribution Margin 2,100,000 600,000 Less: Total Fixed costs 1,400,000 800,000 Operating Profit/(loss) P 700,000 (P200,000) Of the total fixed costs, P350,000 allocated to Det. BB is considered ass sunk cost. In, addition if Dept. BB will be eliminated 10% decrease of sales in Dept. AA will occur.A company has three product lines, one of which reflects the following results: Sales $215,000 Variable expenses 125,000 Contribution margin 90,000 Fixed expenses 130,000 Net loss $ (40,000) If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company’s net income will...Hello, I only need Req B. Dudley Transport Company divides its operations into four divisions. A recent income statement for its West Division follows. DUDLEY TRANSPORT COMPANY West Division Income Statement for Year 3 Revenue $ 300,000 Salaries for drivers (210,000 ) Fuel expenses (30,000 ) Insurance (42,000 ) Division-level facility-sustaining costs (24,000 ) Companywide facility-sustaining costs (78,000 ) Net loss $ (84,000 ) Required By how much would companywide income increase or decrease if West Division is eliminated? Should West Division be eliminated? Assume that West Division is able to increase its revenue to $324,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segment were eliminated. Should West Division be eliminated if revenue were $324,000? What is the minimum amount of revenue required to justify continuing the operation of West Division?
- When Mr. Ree Active, president and chief executive of Precious Products Inc., first saw the segmented income statement below, he flew into his usual rage: “When will we ever start showing a real profit? I'm starting immediate steps to eliminate those two unprofitable lines!” Product Lines Total U V W Sales $250,000 $100,000 $75,000 $75,000 Variable expenses 119,000 37,000 35,000 47,000 Contribution margin 131,000 63,000 40,000 28,000 Traceable fixed expenses* 98,000 31,000 37,000 30,000 Common expenses, allocated 32,900 18,000 10,500 4,400 Operating income (loss) $100 $14,000 -$7,500 -$6,400 *These traceable expenses could be eliminated if the product lines to which they are traced were discontinued. Calculate: Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer.The Furniture Company currently has three divisions: Maple, Oak, and Cherry. The oak furniture line does not seem to be doing well and the president of the company is considering dropping this line. If it is dropped, the revenues associated with the Oak Division will be lost and the related variable costs saved. Also, all of the fixed costs presented under the oak furniture line would be eliminated. The income statements, by divisions, are as follows. Maple Oak CherrySales P55,000 P85,000 P100,000Variable Costs 40,000 72,000 82,000Contribution Margin 15,000 13,000 18,000Fixed costs 10,000 14,000 10,200Oper. profit(loss) P 5,000 P(1,000) P 7,800Which one of the following options should be recommended to the president of the company? Answers: a. Continue operating the Oak Division as discontinuance would result in…Your Company plans to discontinue a department that has a contribution margin of $22,000 and $50,000 in fixed costs. Of the fixed costs, 42% cannot be eliminated. What is the effect of this discontinuance on net operating income? A. decrease by $ 7,000 B. increase by $ 1,000 C. decrease by $24,000 D. decrease by $ 1,000 E. increase by $ 7,000