The following information has been extracted from the books of the ABC company which has two operating divisions. Battery Division Tyre Division Sales Revenue 1,664,200 978,520 96,200 76,470 Cost of Goods sold Contribution Margin Operating Expenses 685,980 527,940 19,730 43,600 Net Income / (Deficit) 157,740 (23,870) Additionally. it has been determined that in the Tyre Division, the cost of Goods Sold is made up of $ 70,000 in variable costs and $ 6,470 in Fixed costs. Similarly, the Operating Cost is made up of $ 15,000 of Variable Costs and $ 28,600 of Fixed costs. The company's accountant has recommended that the Tyre division be closed as it is making a loss.

The following information has been extracted from the books of the ABC company which has two operating divisions. Battery Division Tyre Division Sales Revenue 1,664,200 978,520 96,200 76,470 Cost of Goods sold Contribution Margin Operating Expenses 685,980 527,940 19,730 43,600 Net Income / (Deficit) 157,740 (23,870) Additionally. it has been determined that in the Tyre Division, the cost of Goods Sold is made up of $ 70,000 in variable costs and $ 6,470 in Fixed costs. Similarly, the Operating Cost is made up of $ 15,000 of Variable Costs and $ 28,600 of Fixed costs. The company's accountant has recommended that the Tyre division be closed as it is making a loss.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.8E: Corrections to service department charges Panda Airlines Inc. has two divisions organized as profit...

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