eureh Leslie\'s Sunglass Company\'s western territory\'s forecasted income state
ID: 2592763 • Letter: E
Question
eureh Leslie's Sunglass Company's western territory's forecasted income statement for the upcoming year is as follows: Sales revenue Variable costs Contribution margin Fixed costs Operating loss $840,000 (520,000) $320,000 (480,000) $(160,000) The company's management is considering dropping the westen territory and has determined that $300,000 of the fixed expenses is avoidable. What is the change in Leslie's Sunglass Company's forecasted operating for the upcoming year if the western territory is dropped? Assume the company predicts an operating loss across the entire company Select one: O A. Operating profit will decrease by $320,000. B. Operating profit will increase by $320,000. C. Operating loss will decrease by $20,000. D. Operating loss will increase by $20,000.Explanation / Answer
Unavoidable fixed costs=(480,00-300,000)=$180,000
Hence as a result of dropping the western territory;the operating profit would decrease by =(180,000-160,00)
=$20000
Hence the correect option is D.
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