The Rial Company\'s income statement for June is given below otal 189 Variable e
ID: 2413319 • Letter: T
Question
The Rial Company's income statement for June is given below otal 189 Variable expenses ntribution margin 266,196 137,540 128,656 aceable fixed expenses Segment margin 130,496 75,340 mon fixed expenses Net operating income $87496 A proposal has been made that will lower variable expenses in Division L to 28% of sales. However, this reduction can only be accomplished by a $15,600 increase in Division L's traceable fixed expenses. If this proposal is implemented and if sales remain constant, overall company net operating income should: O increase by $23,168 O increase by $15,600 O decrease by $8,032 O decrease by $15,600Explanation / Answer
decrease by $8,032 Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Division F Division L Total Sales 299,000.00 189,200.00 488,200.00 Less Variable Expenses (161,460.00) (60,544.00) (222,004.00) Contribution Margin 137,540.00 128,656.00 266,196.00 Traceable fixed expenses (62,200.00) (73,500.00) (135,700.00) Segment Margin 75,340.00 55,156.00 130,496.00 Common Fixed expenses (43,000.00) Net operating income 87,496.00 Paticulars Division F Division L Total Sales 299,000.00 189,200.00 488,200.00 Less Variable Expenses Division L = 189,200*28% (161,460.00) (52,976.00) (214,436.00) Contribution Margin 137,540.00 136,224.00 273,764.00 Traceable fixed expenses Division L =73,500 + 15,600 (62,200.00) (89,100.00) (151,300.00) Segment Margin 75,340.00 47,124.00 122,464.00 Common Fixed expenses (43,000.00) Net operating income 79,464.00 Net operating income would decrease by 87,496 - 79,464 8,032.00
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