PLUS ysnte miansinke mensasgerfal Accounting, 2e Help I Question :1 Veronica Mar
ID: 2549346 • Letter: P
Question
PLUS ysnte miansinke mensasgerfal Accounting, 2e Help I Question :1 Veronica Mars, a recent the following presentation to Dunn's board of directors and our total profits would increase by $26,000. evaluated the made suggested the Percy Division be eliminated. "If the Percy Division is eliminated, she sald, The Other $1,664,200 $100,000 $1,764,200 978,520 76,000 1,054,520 685,680 24,000 709,680 577,940 157.740 $(26,000$131,740 Cost of goods sold Operating expenses Net income 527,94050,000 In the Percy Division, cost of goods sold is $61,000 variable and $15,000 fxed, and operating expenses are $30,000 variable and $20,000 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Continue Eliminate Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixedExplanation / Answer
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Eliminate
Net income Increase
(Decrease)
Sales
1,00,000
0
(1,00,000)
Variable cost
Cost o goods sold
61,000
0
(61,000)
Operating expenses
30,000
0
(30,000)
Total variable
91,000
0
(91,000)
Contribution Margin
9,000
0
(9,000)
Fixed cost
Cost of goods sold
15,000
15,000
0
Operating expenses
20,000
20,000
0
Total fixed
35,000
35,000
0
Net income (loss)
(26,000)
(35,000)
(9,000)
Veronica is Incorrect
Continue
Eliminate
Net income Increase
(Decrease)
Sales
1,00,000
0
(1,00,000)
Variable cost
Cost o goods sold
61,000
0
(61,000)
Operating expenses
30,000
0
(30,000)
Total variable
91,000
0
(91,000)
Contribution Margin
9,000
0
(9,000)
Fixed cost
Cost of goods sold
15,000
15,000
0
Operating expenses
20,000
20,000
0
Total fixed
35,000
35,000
0
Net income (loss)
(26,000)
(35,000)
(9,000)
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