Question

The management accountant for Giada's Book Store has prepared the following income statement for the most current year: Sales Cost of goods sold Gross profit Order and delivery processing Rent (per sq. foot used) Allocated corporate costs Corporate profit Cookbook $70,000 37,000 33,000 23,000 7,000 7,000 $ (4,000) Travel Book $158,000 69,000 89,000 24,000 1,000 7,000 $57,000 Classics $55,000 24,000 31,000 10,000 3,000 7,000 $11,000 Total $283,000 130,000 153,000 57,000 11,000 21,000 $64,000 If the travel book line had been discontinued, corporate profits for the current year would have decreased by (Assume there is no alternative use for the space rented.) O A. $65,000 O B. $89,000 OC. $64,000 OD. $57,000

Answer 1

Answer:

Option D : $57,000

Explanation:

Corporate profits of each department, reached after the adjustment of all expense are given in the table provided in the question.

From the table, we know that the corporate profit of Travel book line is $57,000.

Therefore, if travel book line had been discontinued, Corporate profits for the current year would have decreased by $57,000.

Therefore, answer is Option D : $57,000