Sunland Company is deciding whether or not to discontinue one of its divisions. The division's contribution margin is $43000 per year. The fixed costs charged to the division total $50000, but $29000 would be eliminated if the division is discontinued. If the division is eliminated, the overall operating income will O decrease by $14000. O increase by $43000. O decrease by $22000. O decrease by $29000.

Sunland Company is deciding whether or not to discontinue one of its divisions. The division's contribution margin is $43000 per year. The fixed costs charged to the division total $50000, but $29000 would be eliminated if the division is discontinued. If the division is eliminated, the overall operating income will O decrease by $14000. O increase by $43000. O decrease by $22000. O decrease by $29000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Patel Corporation is considering discontinuing one of its product lines. This product line generates a contribution margin of $330,000 per year. Fixed expenses allocated to the product line are $420,000 per year. It is estimated that $255,000 of these fixed expenses could be eliminated if the product line is discontinued. Based on this data, what is the financial advantage or disadvantage of discontinuing the product line? Multiple Choice Financial disadvantage of $75,000 per year. Financial advantage of $165,000 per year. Financial advantage of $75,000 per year.
Wallen Corporation is considering eliminating a department that has an annual contribution magin of $80,000 and $160,000 in annual fixed costs. Of the fixed costs, $90,000 cannot be avoided. This annual financial advantage/ disadvantage for the copany of eliminating this department is ? A. 10,000 or B. -10,000 or C. 80,000 or D. -80,000
A study has been conducted to determine if one of the departments in Your Company should be discontinued. The contribution margin in the department is $50,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued. Discontinuing this product would result in a $120,000 increase in the contribution margin of other product lines. If the department is discontinued, what would be the annual change in the company's overall net operating? It the change is a decrease, enter your number with a – in front. Otherwise, just enter the number. ENTER YOUR ANSWER WITHOUT DOLLAR SIGNS OR OTHER DISCRIPTIONS
Wildhorse Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $46000 per year. The fixed costs charged to the department total $49000, $30000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? $49000 decrease $30000 increase $16000 decrease O $19000 increase Save for Later Attempts: 0 of 1 used Submit Answer
A study has been conducted to determine if one of the departments in Your Company should be discontinued. The contribution margin in the department is $50,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued. Discontinuing this product would result in a $120,000 increase in the contribution margin of other product lines. If the department is discontinued, what would be the annual change in the company's overall net operating?
Contribution Margin of Walls Corporation, Consumer division isRs. 1900,000 and the fixed expenses is Rs. 2,200,000 per year.Company is considering to eliminate this consumer division. Ifthe Consumer Division is eliminated, $1,700,000 of the abovefixed expenses could be avoided. What will be the effect onWall's profit next year if Consumer Division is eliminated?
Carla Vista Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $33000 per year. The fixed costs charged to the department total $39000. $17000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? O $39000 decrease O $16000 decrease O $22000 increase O $17000 increase
Kahn Corporation (a multi-product company) produces and sells 8,000 units of Product X each year. Each unit of Product X sells for $10 and has a contribution margin of $6. If Product X is discontinued, $50,000 of the $60,000 in annual fixed costs charged to Product X could be eliminated. The annual financial advantage (disadvantage) for the company of eliminating this product should be:
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
A study has been conducted to determine if one of the departments in Carry Corporation should be discontinued. The contribution margin in the department is $80,000 per year. Fixed expenses charged to the department are $95,000 per year. It is estimated that $50,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the yearly financial advantage (disadvantage) for the company would be: Multiple Choice O ($30,000) ($15,000) $15,000 $30,000
A study has been conducted to determine if one of the departments in Parry Company should be discontinued. The contribution margin in the department is $40,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $30,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the company's overall net operating income would: Oa. decrease by $15,000 per year. Ob. decrease by $10,000 per year. c. increase by $10,000 per year. Od. increase by $15,000 per year.
A study has been conducted to determine if one of the departments in Your Company should be discontinued. The contribution margin in the department is $50,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued. If the department is discontinued, what would be the annual change in the company's overall net operating? It the change is a decrease, enter your number with a – in front. Otherwise, just enter the number. ENTER YOUR ANSWER WITHOUT DOLLAR SIGNS OR OTHER DISCRIPTIONS.