4th option is 583,000. Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line.$ 522,000(122,000)(333,000)Revenue from Barbecue Division salesSalaries for Barbecue Division workersDirect materialSunk costs (equipment depreciation)Allocated company-wide facility-sustaining costs(80,500)( 61,000)$ (74,500)Net lossIf the Division is eliminated, what is the total amount of avoidable cost?Multiple Choice$455,000.$535,500.$541,500.

Total avoidable costs = Salaries for workers + Direct materials

Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line. $ 522,000 (122,000) Revenue from Barbecue Division sales Salaries for Barbecue Division workers Direct material (333,000) Sunk costs (equipment depreciation) Allocated company-wide facility-sustaining costs (80,500) (61,000) Net loss $ (74,500) If the Division is eliminated, what is the total amount of avoidable cost? Multiple Choice $455,000. $535,500. $541,500.

Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line. $ 522,000 (122,000) Revenue from Barbecue Division sales Salaries for Barbecue Division workers Direct material (333,000) Sunk costs (equipment depreciation) Allocated company-wide facility-sustaining costs (80,500) (61,000) Net loss $ (74,500) If the Division is eliminated, what is the total amount of avoidable cost? Multiple Choice $455,000. $535,500. $541,500.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...

See similar textbooks

Similar questions

Verde Company reported operating costs of 50,000,000 as of December 31, 20x5, with the following environmental costs: Required: 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. What is the message of this report? 2. Prepare a pie chart that shows the relative distribution of environmental costs by category. What does this report tell you? 3. What if Verde deliberately did not include the cost of damaging the ecosystem because of solid waste disposal in its environmental cost report? Offer possible reasons for this decision. If consciously avoided, is this decision unethical?
Mario Company is considering discontinuing a product. The costs of the product consist of $20,000 fixed costs and $15,000 variable costs. The variable operating expenses related to the product total $4,000. What is the differential cost? A. $19,000 B. $15,000 C. $35,000 D. $39,000
Soar Incorporated is considering eliminating its mountain bike division, which reported a loss for the recent year of $4,000 as shown below. Segment Income (Loss) Sales $ 1,075,000 Variable costs 870,000 Contribution margin 205,000 Fixed costs 209,000 Income (loss) $ (4,000) If the mountain bike division is dropped, all $870,000 of its variable costs are avoidable, and $62,700 of its fixed costs are avoidable. The impact on income for eliminating this business segment would be:
Granfield company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42700. The division sales for the year were $973300 and the variable costs were $482000. The fixed costs of the division were $534000. If the backpack division dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on granfield operating income for eliminating this business segment would be?
A guitar manufacturer is considering eliminating its electric guitar division because its $90,790 expenses are higher than its $84,030 sales. The company reports the following expenses for this division. AvoidableExpenses UnavoidableExpenses Cost of goods sold $ 63,000 Direct expenses 9,250 $ 2,950 Indirect expenses 1,010 2,150 Service department costs 10,400 2,030 Should the division be eliminated? (Any loss amount should be indicated with minus sign.)
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 )
Elkhart, a division of Indiana Enterprises, currently makes 110,000 units of a product that has created a number of manufacturing problems. Elkhart’s costs follow. Manufacturing costs: Variable $ 550,000 Fixed 181,000 Allocated corporate administrative cost 61,000 If Elkhart were to discontinue production, fixed manufacturing costs would be reduced by 80%. The relevant cost of deciding whether the division should purchase the product from an outside supplier is:
Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total $397,000 $212,000 $313,000 $922,000 240,000 110,000 265,000 615,000 $157,000 $102,000 $48,000 $307,000 Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Machine rent Supervision Depreciation Segment margin Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $48,000 (sales of $313,000 less total variable costs of $265,000). All variable costs are relevant. (3,000) (12,000) (47,000) (62,000) (10,500) (7,000) (3,500) (21,000) (35,000) (10,000) (25,000) (70,000) $108,500 $73,000 $(27,500) $154,000 Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. In addition, assume that dropping the parquet product line would reduce sales of the strip line by 20% and…
The following information is available for Titan Based on this information, the management is considering eliminating product line C. They assumed that by operating only product lines A and B, they would have higher profits. It was also determined that if product line C is discontinued, 80% of the fixed overhead can be avoided, and 70% of the fixed selling and administrative expenses can also be avoided. Product A Product B Product C Sales P100,000 P300,000 P200,000 Cost of Goods Sold Direct Materials 25,000 75,000 80,000 Labor 20,000 40,000 50,000 Variable Overhead 10,000 20,000 15,000 Fixed Overhead 5,000 15,000 35,000 Total 60,000 150,000 180,000 Gross Profit 40,000 150,000 20,000 Selling and Administrative…
Bell enterprises currently produces several products. Model L78 is showing a net operating loss as indicated by the following condensed income statement prepared for the year ended Dec 31. Sales (1500 units at $320). $480,000 Variable costs(1500 units at $240) $360,000 Contribution margin $120,000 Fixed cost. $125,000 Operating loss. $(5,000) You have been hired by Bell Ent to help analyse the decision as to whether to eliminate Model L78. Upon investigation you discover that if Model L78 is eliminated, $20,000 of the fixed costs shown on the above condensed income statement can be eliminated. The rest of the fixed costs allocated to Model L78 are common fixed costs that will be allocated to the remaining two products. Assess whether Bell Ent should discontinue Model L78.
Cornell Enterprises currently produces several products. Model L78 is showing a net operating loss as indicated by the following condensed income statement prepared for the year ended December 31. You have been hired by Cornell Enterprises to help analyze the decision as to whether to eliminate Model L78. Upon investigation, you discover that if Model L78 is eliminated, $20,000 of the fixed costs shown on the above condensed income statement can be eliminated. The rest of the fixed costs allocated to Model L78 are common fixed costs that will be allocated to the remaining two products produced by Cornell Enterprises. Determine if Cornell Enterprises should discontinue Model L78.
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 wil