contestada

Gion Company is considering eliminating its windows division, which reported an operating loss for the recent year of $105,000. Division sales for the year were $1,110,000 and its variable costs were $975,000. The fixed costs of the division were $220,000. If the windows division is dropped, 65% of the fixed costs allocated to it could be eliminated. The impact on Gion’s operating income from eliminating this business segment would be:

Respuesta :

Answer:

$8,000 increase

Explanation:

The computation of the impact on the operating income is shown below:

= Variable cost + fixed cost - sales revenue

= $975,000 + $143,000 - $1,110,000

= $1,118,000 - $1,110,000

= $8,000 increase

The fixed cost would be

= Fixed cost × eliminated percentage

= $220,000 × 65%

= $143,000

Simply we deduct the total cost from the sales revenue so that the impact can come.

All other information which is given is not relevant. Hence, ignored it

Otras preguntas