Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below. Sales Segment Income (Loss) Variable costs Contribution margin Fixed costs Income (loss) $ 1,110,000 975,000 135,000 220,000 $ (85,000) If the Windows division is dropped, all of its variable costs are avoidable, and $143,000 of its fixed costs are avoidable. The impact on Gion's operating income from eliminating this business segment would be: Multiple Choice $7,200 decrease $8,000 increase $143,000 decrease $143,000 increase $8,000 decrease
Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below. Sales Segment Income (Loss) Variable costs Contribution margin Fixed costs Income (loss) $ 1,110,000 975,000 135,000 220,000 $ (85,000) If the Windows division is dropped, all of its variable costs are avoidable, and $143,000 of its fixed costs are avoidable. The impact on Gion's operating income from eliminating this business segment would be: Multiple Choice $7,200 decrease $8,000 increase $143,000 decrease $143,000 increase $8,000 decrease
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $85,000 as shown below.
Sales
Segment Income (Loss)
Variable costs
Contribution margin
Fixed costs
Income (loss)
$ 1,110,000
975,000
135,000
220,000
$ (85,000)
If the Windows division is dropped, all of its variable costs are avoidable, and $143,000 of its fixed costs are avoidable. The impact on Gion's operating income from eliminating this business segment would be:
Multiple Choice
$7,200 decrease
$8,000 increase
$143,000 decrease
$143,000 increase
$8,000 decrease
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