Trebecker Construction plans to discontinue its roofing segment which last year generated a contribution margin of $65,000 and incurred $90,000 in fixed costs. If the segment is discontinued, half of the fixed costs will be avoided. What effect is expected to occur to the company’s overall profit? A decrease of $20,000 A decrease of $15,000 An increase of $15,000 An increase of $20,000 An increase of $30,000

Trebecker Construction plans to discontinue its roofing segment which last year generated a contribution margin of $65,000 and incurred $90,000 in fixed costs. If the segment is discontinued, half of the fixed costs will be avoided. What effect is expected to occur to the company’s overall profit? A decrease of $20,000 A decrease of $15,000 An increase of $15,000 An increase of $20,000 An increase of $30,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12MC: Youngstown Construction plans to discontinue its rooting segment. Last year, this segment generated...

See similar textbooks

Related questions

Q: In 2019, Preston Company provided the following data: Sales price per unit P100; Variable cost per…

A: New Fixed cost = 1,500,000 + 500,000 = 2,000,000 New Unit variable cost = P60 - 25% = P45 New…

Q: A company that manufactures automatic blowdown control valves (for applications where boilers are…

A: Break-even point is a situation of no profit and no loss. The total cost of the product is equal to…

Q: Build Corporation wants to purchase a new machine for $295,000. Management predicts that the machine…

A: The objective of the question is to calculate the net income after taxes in the second year of the…

Q: [The tollowing Astro Co. sold 20,800 units of its only product and incurred a $56,672 loss (ignoring…

A: Break even point (BEP) refers to that volume of operation where, there is no profit or loss to an…

Q: A company is planning to invest $75,000 (before taxes) in a personnel training program. The $75,000…

A: Net present value =Present value of cash inflows -Present value of cash outflows If the Net present…

Q: Howell Petroleum is considering a new project that complements its existing business. The machine…

A: Net Present Value of the project needs to be determined to evaluate the capital budgeting decision.…

Q: Bronco Co. is considering a new project that complements its existing business. The machine required…

A: Sales = $2,650,000 per yearInitial cost = $3,650,000Useful life = 4 yearsCOGS & Operating…

Q: Beacon Company is considering automating its production facility. The initial investment in…

A: Formula workings:

Q: Georgia Mills Company (GMC) purchased a milling machine, which it intends to use for the next five…

A: Computation of the equivalent dollar savings per operating hour is shown below: Hence, the company…

Q: Wexford Industrial Supply is considering a new project with estimated depreciation of $38,200, fixed…

A: Formula: accounting break-even level = (Sale -Fixed cost -Depreciation)/ Variable cost

Q: A $60,000 machine with a 8-year class life was purchased 2 years ago. The machine will now be sold…

A: Cost of old machine = $60,000Useful life = 8 yearsNew machine cost = $86,000Useful life = 10…

Q: An industrial organization has established an automated assembly line (for $240,000) that will…

A: a) Before Tax Cash Flow (BTCF) and After-Tax Cash Flow (ATCF) can be computed as follows: Result…

Q: (a)If the company plans to replace the machine when it wears out on a perpetual basis, what is the…

A: The equivalent annual cost is the annual cost of an item if it is a long-term project. It…

Q: Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year…

A: Year Cash inflow PV factor PV of Cash Inflow 1 21,000 0.8547 17,948.72 2…

Q: Wildhorse Corporation is considering a eliminating a department that has incurred losses over the…

A: MARGINAL COSTING INCOME STATEMENT Marginal Costing Income Statement is One of the Important Cost…

Q: A company intends to install new management software for its warehouse. The software will cost…

A: The benefit in the first year is the total reduction through reduction in staff as well as general…

Q: Your firm is contemplating the purchase of a new $615,000 computer-based order entry system. The…

A: Initial investment =$615,000Estimated life =5 yearsBefore tax cost saving =$192,000Change in working…

Question

		A decrease of $20,000
		A decrease of $15,000
		An increase of $15,000
		An increase of $20,000
		An increase of $30,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Discontinuing operations for a product or a service line

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Patel Corporation is considering discontinuing one of its product lines. This product line generates a contribution margin of $330,000 per year. Fixed expenses allocated to the product line are $420,000 per year. It is estimated that $255,000 of these fixed expenses could be eliminated if the product line is discontinued. Based on this data, what is the financial advantage or disadvantage of discontinuing the product line? Multiple Choice Financial disadvantage of $75,000 per year. Financial advantage of $165,000 per year. Financial advantage of $75,000 per year.
Capri Construction plans to discontinue its roofing segment. last year, this segment generated a contribution margin of $65,000 and incurred $70,000 in fixed costs. discontinuing the segment will allow the company to avoid half of the fixed costs. what effect is expected to occur on the company's overall income (loss)? -$(30,000) please explain step by step how they got this answer. Thank you.
Wildhorse Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $46000 per year. The fixed costs charged to the department total $49000, $30000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? $49000 decrease $30000 increase $16000 decrease O $19000 increase Save for Later Attempts: 0 of 1 used Submit Answer
Carla Vista Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $33000 per year. The fixed costs charged to the department total $39000. $17000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? O $39000 decrease O $16000 decrease O $22000 increase O $17000 increase
What is the reduction in Variable manufacturing cost
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice ($10,000) $10,000 ($50,000) $50,000 Next
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice ($10,000) $50,000 ($50,000) $10,000
The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow: Sales of 15,000 units $ 150,000 Variable expenses 120,000 Contribution margin 30,000 Fixed expenses 40,000 Net operating loss $ (10,000 ) If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. Suppose that if the Doombug toy is dropped, the production and sale of other Draper toys would increase so as to generate a $16,000 increase in the contribution margin received from these other toys. If all other conditions are the same, the financial advantage (disadvantage) from discontinuing the production and sale of Doombugs would be: $28,000 ($6,000) ($2,000) $14,000
pm
Bran Corporation plans to discontinue a division that generates a total contribution margin of $40,000 per year. Fixed overhead associated with this division is $150,000, of which $100,000 cannot be eliminated. What will be the impact on Bran's overall profitability if the division is discontinued? Increase by $60,000. None of these. Decrease by $60,000. Increase by $10,000. Decrease by $10,000.
1. Medavoy Company is considering a new project that complements its existing business. The machine required for the project costs $4.75 million. The marketing department predicts that sales related to the project will be $2.63 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated to zero over its 4-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 25 percent of sales. The company also needs to add net working capital of $215,000 immediately. The additional net working capital will be recovered in full at the end of the project's life. The corporate tax rate is 23 percent and the required return for the project is 10 percent. What is the value of the NPV for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g. .,1,234,567.89.) 2. Shinoda…
A company with $500,000 in operating assets is considering the purchase of a machine that costs $60,000 and which is expected to reduce operating costs by $15,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes - O 0.25 years 8.3 years 04 years 33.3 years