Connect-Intemet Explorer Exam 2 Chapters 22 to 24 6 Help Save & Exit Submit 0 13

Question

Connect-Intemet Explorer Exam 2 Chapters 22 to 24 6 Help Save & Exit Submit 0 13 Required information The fowowing invormation applies to the questions displayed below J alton Co. follows a policy of allocating all common costs equally among its profit centers A partial responsiblity inc ome statement for a typical month is shown below Dalton Profit Profit Profit CoCenter 1 Center 2 Center 3 80.000 60,000 64,000 $ 38,000 26,000 16,000 4,000) Responsibility 5230, 000 90,000 Common fixed cost s 5192,00064,000 $64,00 Income from operations After evauating these data, Dalton Co decides to close Prof Center 3 This action eliminates all revenue, variable costs and fixed costs traceable to Center 3, but eiminates only $43,000 n common fixed costs Closing Profit Center 3 has no eftect upon the responsibility margins of Centers 1 and 2 Closing Profit Center 3 should cause Dalton's mornthly operating income to Multiple Choice ncrease by $4,000 Decrease by 517.000 Increose by $17.000

Explanation / Answer

loss of responsibility margin -60,000 Savings in common fixed cost 43,000 net income decrease -17,000 answer Decrease by $17,000

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