Acme Company has two divisions, East Division and West Division. Here are data regarding the current year: East Division West Division Sales revenue $560,000 $478,500 Variable costs 192,000 247,500 Contribution margin $368,000 $231,000 Traceable fixed costs 153,000 162,000 Segment margin $215,000 $69.000 Segment margin ratio 38.4% 14.4% Acme plans to discontinue the West Division. If the division is eliminated, 75% of its traceable fixed costs are avoidable. The remaining 25% are sunk costs. Acme's common fixed costs are $306,700. What would Acme's operating income (loss) be if it eliminates the West Division? $215,000 $(132,200) O $(91,700) $(22,700)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Acme Company has two divisions, East Division and West Division.
Here are data regarding the current year:
East Division
West Division
Sales revenue
$560,000
$478,500
Variable costs
192,000
247,500
Contribution margin
$368,000
$231,000
Traceable fixed costs
153,000
162,000
Segment margin
$215,000
$69.000
Segment margin ratio
38.4%
14.4%
Acme plans to discontinue the West Division. If the division is
eliminated, 75% of its traceable fixed costs are avoidable. The
remaining 25% are sunk costs. Acme's common fixed costs are
$306,700. What would Acme's operating income (loss) be if it
eliminates the West Division?
$215,000
$(132,200)
O $(91,700)
$(22,700)
Transcribed Image Text:Acme Company has two divisions, East Division and West Division. Here are data regarding the current year: East Division West Division Sales revenue $560,000 $478,500 Variable costs 192,000 247,500 Contribution margin $368,000 $231,000 Traceable fixed costs 153,000 162,000 Segment margin $215,000 $69.000 Segment margin ratio 38.4% 14.4% Acme plans to discontinue the West Division. If the division is eliminated, 75% of its traceable fixed costs are avoidable. The remaining 25% are sunk costs. Acme's common fixed costs are $306,700. What would Acme's operating income (loss) be if it eliminates the West Division? $215,000 $(132,200) O $(91,700) $(22,700)
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