A division of a large company reports the information shown below for a recent y

Question

A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 40% of the indirect fixed costs are avoidable. Based on this information, should the division be eliminated? Sales Variable costs Fixed costs $ 280,000 152,000 Direct Indirect 32,000 54,000 Operating loss $ (42,000) 1-a. Compare the amounts of total revenues and total avoidable expenses. Revenues Avoidable expenses Revenues are greater than (less than) avoidable expenses by 1-b. Based on this information, should the division be eliminated? O Yes No

Explanation / Answer

1a Revenues 280000 Avoidable expense 205600 =152000+32000+(54000*40%) Revenues are greater than (less than) avoidable expenses by 74400 1b No, The division should not be eliminated because its sales of are greater than its avoidable expenses

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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