The following is the income statement by segments for Jacob Corp. Income Stateme
ID: 2501207 • Letter: T
Question
The following is the income statement by segments for Jacob Corp.
Income Statement
Company
Television
Computer
Sales
$ 490,000
$ 330,000
$ 160,000
Variable costs
230,000
150,000
80,000
Contribution Margin
260,000
180,000
80,000
Traceable Fixed Costs
165,000
90,000
75,000
Common costs Allocated
60,000
39,600
20,400
Profit
$ 35,000
$ 50,400
$ (15,400)
The company is considering eliminating Computer division as it currently shows a loss of $15,400. Determine the company total profit if the Computer division is eliminated.
$24,600
$55,400
$30,000
$45,000
Correct answer not listed
Income Statement
Company
Television
Computer
Sales
$ 490,000
$ 330,000
$ 160,000
Variable costs
230,000
150,000
80,000
Contribution Margin
260,000
180,000
80,000
Traceable Fixed Costs
165,000
90,000
75,000
Common costs Allocated
60,000
39,600
20,400
Profit
$ 35,000
$ 50,400
$ (15,400)
Explanation / Answer
If computer division is closed than all the revenue and cost will be eliminated of this division except common cost allocated as it is not traceble fixed cost, if division operated or discontinued this cost will be incurred. So this will be reduced from the profit of the company Company $ Profit (Television only division) 50400 Less: Common Cost allocated of Computer Division 20400 Profit of Company as now only television division is there $30000 Ans C
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