Exam II xAssigniments d, ? ezto.mheducation.com/hmtpx ? fl Apps Hawkes Learning

Question

Exam II xAssigniments d, ? ezto.mheducation.com/hmtpx ? fl Apps Hawkes Learning Blackboard Learn Welcome my utrg Blackboard Lean W Cinemark Theatres G Work in Japan Ga 27 Clay Inc. has two divisions, Myrtle and Laurel. Following is the income statement for the previous year MyrtleLourel Sales Variable Costs Contribution Margirn Fixed Costs (allocated) Profit Margin S 562,100 338,200 900.300 176100 354 500 178,400 383,700 286,575 162,100 545,800 172,825 459.400 $ 97125 (10,725) 86,400 What would Clay's profit margin be if the Laurel division was dropped and all fixed costs are unavoidable? $86400 profit $383,700 profit O $97125 proft O $75.700 loss O Type here to search

Explanation / Answer

If laurel division would be dropped

Sales 562100 Variable cost 178400 Contribution 383700 Fixed Cost 459400 Profit margin -75700 Correct answer is (d) i.e. loss 75700/- Note: Unavoidable fixed cost would be continued incurred irrespective of sales at fixed amount

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