The Kelsh Company has two divisions--North and South. The divisions have the fol

Question

The Kelsh Company has two divisions--North and South. The divisions have the following revenues and expenses:

247,000   

197,000

$(60,500)  

$114,000

    
Management at Kelsh is pondering the elimination of North Division. If North Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected. Given these data, the elimination of North Division would result in an overall company net operating income (loss) of:

North South   Sales $970,000    $877,000   Variable expenses 481,500    321,000   Traceable fixed expenses 302,000    245,000   Allocated common corporate expenses

247,000   

197,000

  Net operating income (loss)

$(60,500)  

$114,000

Explanation / Answer

After Elimination of North Division

The elimination of North Division would result in an overall company net operating loss of $133000

Particulars North South Total Corporate Sales 877000 877000 Less: Variable Expenses -321000 -321000 Contribution 556000 556000 Less: Traceable Fixed Expenses -245000 -245000 Less: Allocated Common Corporate Expenses -444000 Net Income (loss) 0 311000 -133000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.