31. The operations of Hart Corporation are divided into the Will Division and th

Question

31. The operations of Hart Corporation are divided into the Will Division and the Aloy Division. Projections for the next year are as follows: Will $560,000 $364,000 $196,000 Aloy Total $336,000 $896,000 154,000 350.000 $182,000 $546,000 Sales Less: Variable costs Contribution margin Less: Direct fixed costs Segment margin Less: Allocated common cost Operating income (loss) $42,000 $238,000 147.000 The firm is considering dropping the Aloy line. If so, the allocated common costs will, as a whole, remain and be reallocated to the Will. If this occurs, operating income for Hart Corporation, as a whole, if the Aloy Division were dropped would be a. $133,000 b. $112,000 c. $91,000 d. $49,000

Explanation / Answer

Answer is option D $49,000

Operating income for Hart Corporation, as a whole, if the Aloy Division were dropped would be:

Operating income Will Division - Allocated common cost of Aloy Division

=112000-63000 = 49000

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