Variable Costs Contribution Margin Direct fixed expenses Common fixed expenses Total fixed expenses Operating income (loss) 489,500 $247,500 $132,000 82,500 $214,500 $33,000 Select one: 315,700 $38,500 $29,700 33,000 $62,700 $(24,200) 662,200 $279,400 $179,300 103,400 $282,700 $(3,300) DJH is considering eliminating the departments that show losses. Assume that the direct fixed expenses could be avoided if the department is eliminated. What effect would elimination of Department 3 have on DJH's total operating income? a. It would decrease total operating income by $100,100. b. It would increase total operating income by $103,400. c. It would decrease total operating income by $279,400. d. None of these options are correct. e. It would decrease total operating income by $3,300.
Variable Costs Contribution Margin Direct fixed expenses Common fixed expenses Total fixed expenses Operating income (loss) 489,500 $247,500 $132,000 82,500 $214,500 $33,000 Select one: 315,700 $38,500 $29,700 33,000 $62,700 $(24,200) 662,200 $279,400 $179,300 103,400 $282,700 $(3,300) DJH is considering eliminating the departments that show losses. Assume that the direct fixed expenses could be avoided if the department is eliminated. What effect would elimination of Department 3 have on DJH's total operating income? a. It would decrease total operating income by $100,100. b. It would increase total operating income by $103,400. c. It would decrease total operating income by $279,400. d. None of these options are correct. e. It would decrease total operating income by $3,300.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...
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