The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses: East West Sales $ 601,000 $ 504,000 Variable costs 229,000 298,000 Traceable fixed costs 149,500 190,000 Allocated common corporate costs 126,600 154,000 Net operating income (loss) $ 95,900 $ (138,000 ) 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: Multiple Choice $95,900 $(58,100) $(138,000) $(42,100)
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses: East West Sales $ 601,000 $ 504,000 Variable costs 229,000 298,000 Traceable fixed costs 149,500 190,000 Allocated common corporate costs 126,600 154,000 Net operating income (loss) $ 95,900 $ (138,000 ) 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: Multiple Choice $95,900 $(58,100) $(138,000) $(42,100)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:
| East | West | |||||
| Sales | $ | 601,000 | $ | 504,000 | ||
| Variable costs | 229,000 | 298,000 | ||||
| Traceable fixed costs | 149,500 | 190,000 | ||||
| Allocated common corporate costs | 126,600 | 154,000 | ||||
| Net operating income (loss) | $ | 95,900 | $ | (138,000 | ) | |
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:
Multiple Choice
-
$95,900
-
$(58,100)
-
$(138,000)
-
$(42,100)
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