Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs based on division sales. If the Commercial division is dropped, all of its variable costs are avoidable, and $116,000 of its fixed costs are avoidable. The impact on Sammy's operating income from eliminating the commercial division would be: Sales Variable costs Contribution margin. Fixed costs Net income (loss) Garden $ 675,000 388,900 286, 100 263,200 22,900 Farm $ 968,000 430,000 538,000 351, 500 186,500 Commercial $ 740,000 665,800 74,200 311,400 (237,200)

Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs based on division sales. If the Commercial division is dropped, all of its variable costs are avoidable, and $116,000 of its fixed costs are avoidable. The impact on Sammy's operating income from eliminating the commercial division would be: Sales Variable costs Contribution margin. Fixed costs Net income (loss) Garden $ 675,000 388,900 286, 100 263,200 22,900 Farm $ 968,000 430,000 538,000 351, 500 186,500 Commercial $ 740,000 665,800 74,200 311,400 (237,200)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1SEQ: Mario Company is considering discontinuing a product. The costs of the product consist of $20,000...

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