The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:...
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:
| East | West | |||||
| Sales | $ | 595,000 | $ | 445,500 | ||
| Variable costs | 180,000 | 236,500 | ||||
| Traceable fixed costs | 144,000 | 203,400 | ||||
| Allocated common corporate costs | 129,600 | 187,000 | ||||
| Net operating income (loss) | $ | 141,400 | $ | (181,400 | ) | |
The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:
Homework Answers
Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:
If west division is eliminated:
Loss of contribution margin = ( 445500 - 236500 ) = - 209000
Add:- savings in traceable FC = 203400
NOI will decrease by :- $ 5600
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The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:...
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:...
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses: East West Sales $ 595,000 $ 445,500 Variable costs 180,000 236,500 Traceable fixed costs 144,000 203,400 Allocated common corporate costs 129,600 187,000 Net operating income (loss) $ 141,400 $ (181,400 ) The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by...
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