Answer:
a) property rights and obligations.
Explanation:
In the case of the information age, the liabilities at which the individuals and the organizations would be concerned related to the intellectual property could decline that lies with the moral dimension of the property rights and its liability as the intellectual property includes the property rights
SO as per the given situation, the option a is correct
Vaughn Manufacturing has beginning work in process inventory of $158000 and total manufacturing costs of $377000. If cost of goods manufactured is $380000, what is the cost of the ending work in process inventory
Answer:
Ending WIP= $155,000
Explanation:
To calculate the ending work in process, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
380,000= 158,000 + 377,000 - Ending WIP
Ending WIP= 158,000 + 377,000 - 380,000
Ending WIP= $155,000
The beginning inventory of BG Action Figures is understated by $7 million at December 31, 20x8. What is the effect on 20x8 cost of goods sold? Group of answer choices $7 million overstated $7 million understated no effect none of the above
Answer:
$7million understated
Explanation:
Based on the information given the effect on 20x8 COST OF GOODS SOLD will be UNDERSTATED by $7 million reasons been that since the OPENING INVENTORY IS UNDERSTATED by $7 million which means that the COST OF GOODS SOLD will as well be UNDERSTATED by the same amount based on the fact that opening inventory adds to Cost of goods sold.
All of the following questions are open-ended problems. You must compute an answer for every problem. For percentage answers, calculate your answer as a percent rounded to 2 decimal places. For example, you would record ROA = .1263974 as 12.64% (note that on D2L you will enter 12.64 without the percent sign). For dollar answers, round to the nearest dollar. For example, you would record $12,345.83943 as $12,346 (note that on D2L you will enter 12346 without a comma and without the dollar sign).13. Felton Farm Supplies, Inc. has an ROA (return on assets) of 12 percent, total assets of $1,000,000 and a net profit margin of 4.25 percent. What are Felton Farm Supplies annual sales?14. Krisle and Kringle's debt ratio = 72.0%. What is the company’s debt-to-equity ratio? (Enter answer as a ratio rounded to 2 decimal places – that is, do not convert to a percent; for example, enter 80/35 = 2.2857 as 2.29).15. Philips, Inc has a debt ratio of 42.5% and ROE = 15%. What is Phillips’ ROA? (Enter answer as a percent).16. A firm has an ROA of 16% and a debt/equity ratio of 1.45. The firm's ROE is _________. (Enter answer as a percent).17. Assume that XYZ, Inc. has:Debt ratio = 70% Net profit margin = 15% Return on assets (ROA) = 7.5% Find XYZ’s Total Asset Turnover ratio. (Enter answer as a ratio – that is, do not convert to a percent).
Solution :
13. Net income = total assets x ROA
= $ 1,000,000 x 12%
= $ 120,000
Net Income for company is $120,000.
Net Profit margin = 4.25%
Total sales = net income / net profit margin
= $ 120,000 / 4.25%
= $ 2,823,529
Total sales for company is $ 2,823,529
14. Debt ratio = 72%
So weight of debt = 72%
Weight of equity = 1 - 72%
= 28%
Debt equity ratio [tex]$=\frac{72 \%}{28 \%}$[/tex]
= 2.57
Debt equity ratio is 2.57
15. Debt ratio = 42.50%
So, weight of debt = 42.50%
Weight of equity = 1 - 42.50%
= 57.50%
Weight of equity is 57.50%.
Return on equity = 15%.
Return on assets = 57.50% × 15%
= 8.625%
Return on assets is 8.625%.
16.
Debt Equity ratio = 1.45
Weight of debt = 59.18%
Weight of equity = 40.82%
Return on assets = 16%
Return on equity = 16% / 40.82%
= 39.20%
Return on equity is 39.20%.
17.
Total Assets turnover = Sales / Total Assets
= (Net Income / Total Assets) / (Net Income / Sales)
= ROA / Net Profit margin
= 7.50% / 15%
= 0.50
Total Assets turnover is 0.50.
explain briefly features of creativity
Answer:
In conclusion we can say that if we want to run a creative activity in the classroom, we need to check for the presence of these four features: imagination, purpose, originality and value, and organise the process in a way that all these can be incorporated.
Explanation:
hope it helps!
Brit wants to sell throw blankets for the holiday season at a local flea market. Brit purchases the throws for $15, and sells them to his customers for $35. The rental space is fixed fee of $1500 for the season. Assume there is no leftover value for unsold units. The payoff, if he orders 200 and Demand is 150, is:__________a. 2800. b. 1050. c. 50. d. 800.
Answer:
Correct option is b. 1050.
Explanation:
Note: There is an error in this question as the number of unit of order is 180 NOT 200 erroneously included in the question. The question is therefore fixed and the complete correct question is therefore provided before answering the question as follows:
Brit wants to sell throw blankets for the holiday season at a local flea market. Brit purchases the throws for $15, and sells them to his customers for $35. The rental space is fixed fee of $1500 for the season. Assume there is no leftover value for unsold units. The payoff, if he orders 180 and Demand is 150, is:__________a. 2800. b. 1050. c. 50. d. 800.
The explanation of the order is now provided as follows:
Total revenue = Demand * Selling price = 150 * $35 = $5,250
Cost of purchases = Order * Cost per unit = 180 * $15 = $2,700
Since it is assumed that there is no leftover value for unsold units, this implies that:
Payoff = Total revenue - Cost of purchases - Fixed fee for rental space = $5,250 - $2,700 - $1,500 = $1,050
This implies that the payoff is $1,050. Therefore, correct option is b. 1050.
Ormand Organic Grocery has invested in a yogurt stand for its store. The investment cost the company $100,000. Variable materials, preparation, and marketing costs are expected to be $1.30 per unit and fixed costs are estimated at $7,400 a year. If actual sales were 21,400 servings, what would the ROI be using the sales price of $2.40
Answer:
15.4%
Explanation:
Calculation to determine what would the ROI be
ROI=[ ( $2.40 - $1.30) * 21,400 - $7,400]/100,000
ROI=($1.1 * 14,000)/100,000
ROI=$15,400/100,000
ROI=0.154*100
ROI=15.4%
Therefore the ROI would be 15.4%
Gwen plans to retire in 3 years with $426,000 in her account, which has an annual return of 6.29 percent. If she receives annual payments of X, with her first payment of X received in 4 years and her last payment of X received in 9 years, then what is X, the amount of each payment? Number Emerson plans to retire in 3 years with $296,000 in his account, which has an annual return of 10.13 percent. If he receives payments of $60,700 per year and he receives his first $60,700 payment in 4 years, then how many payments of $60,700 can Emerson expect to receive? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00).
Answer:
Q1. $87,423
Q2. 7.06
Explanation:
Q1. Calculation to determine what is X, the amount of each payment
Using Financial calculator to find X
End mode,
N = 6
% = 6.29%
PV= -$426,000
FV = 0
Hence:
X = 87,423
Therefore X, the amount of each payment will be
Q2. Calculation to determine how many payments can Emerson expect to receive
Using Financial calculator
End mode,
%= 10.13%
PV = -$296,000
PMT =$60,700
FV = 0
Hence,
Payment = 7.06
Therefore how many payments can Emerson expect to receive will be 7.06
Giorgio Italian Market bought $8,800 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $8,800. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)
Answer and Explanation:
The journal entry to record the collection is shown below:
Cash $8,932
To Interest Revenue $132 ($8,800 ×90 ÷ 360 × 6%)
To Notes Receivable $8,800
(being the collection is recorded)
Here cash is debited as it increased the assets, credited the interest revenue and note receivable as it increased the revenue but decreased the assets
Molly, a Customer Service Representative for an insurance company, was rude to one of her customers. The customer immediately contacted Molly's supervisor and lodged a complaint against Molly. Molly's supervisor then reprimanded her and recorded the incident in her file. Molly has made a conscious effort ever since not to repeat the same mistake. Which of the following instructional strategies is illustrated in this scenario?
a. Reinforcement
b. Passive learning
c. Behavioral modeling
d. Overlearning
Answer: a. Reinforcement
Explanation:
Reinforcement is a method of correcting behavior by either positive methods or negative. Positive methods involve using a reward and negative involves using punishment.
This falls under negative reinforcement as it is a punishment. Molly was punished by her supervisor by her being reprimanded and the incident being put on her file. It led to her being more conscious of the event in future which meant that the reinforcement corrected her behavior.
Calculate the company's breakeven point revenue based on the information below: Total fixed cost 2000 Total variable cost 5000 Sales price/unit 15 Contribution margin 65% 2836 4500 3250 3077
Answer: 3077
Explanation:
Based on the information given, the company's breakeven point revenue based on the information below will be calculated as:
Breakeven point = Fixed cost / Contribution margin ratio
= 2000/65%
= 2000/0.65
= 3077
Therefore, the answer is 3077
Networked organizations are so closely linked online that each can find out what the others are doing instantaneously, as an event takes place. These organizations operate
Answer: b. in real time
Explanation:
When something is said to operate in real time, it means that is is happening instantaneously. Networked organizations that are so closely linked that their actions are seen instantaneously are therefore operating in real time.
These organizations can be in multiple countries but doing work on a similar platform. For instance, people around the world could be working on a single Go-0gle Sheets file and seeing the changes they all make in real time.
Networked organizations are so closely linked online that each can find out what the others are doing instantaneously, as an event takes place. These organizations operate in real-time. Hence option B is correct.
The key characteristic of networked organizations is their ability to access and exchange information rapidly, allowing them to respond quickly to changes and make informed decisions.
In networked organizations, individuals, teams, departments, or even entire organizations are connected through digital networks and communication platforms.
This enables them to share data, knowledge, and resources in real-time, fostering collaboration, coordination, and synergy among different entities.
Learn more about networked organizations here:
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Networked organizations are so closely linked online that each can find out what the others are doing instantaneously, as an event takes place. These organizations operate
a. as inverted organizations.
b. in real time
c. as digital natives
January 400 $ 31,000 February 800 $ 37,000 March 1,600 $ 49,000 April 2,400 $ 61,000 Using the high-low method, the estimated total fixed cost is
Answer:
$25,000
Explanation:
The computation of the estimated total fixed cost is shown below:
But before that the variable cost per unit is
= ($61,000 - $31,000) ÷ (2,400 - 400)
= $30,000 ÷ 2,000
= $15
Now the estimated fixed cost is
= $61,000 - $15 × 2,400
= $61,000 - $36,000
= $25,000
Your company expects to receive CAD 1,200,000 in 90 days. The 90 day forward rate for CAD is $0.80 and the current spot rate is $0.75. If you use a forward hedge, estimate the cost of hedging the receivable if, 90 days later, the spot rate for CAD 90 days later turns out to be $0.82.
a. $50,000
b. $50,000
c. $75,000
d. $75,000
Answer:
Cost of hedging = $24,000
Explanation:
cost of hedging = 1,200,000 * ($0.80 - $0.82) = 1,200,000 * $0.02 = -$24,000
Since the actual forward rate was higher than th eexpected forward rte, the coampny lost money by hedging the operation. The cost of hedging the operation was $24,000.
At the end of business on September 1, the total displayed on the cash register tape shows $1,059 of cash sales for the day. However, when the clerk and the supervisor count the cash in the register, the count reveals that $1,050 was actually collected from customers.
Complete the journal entry.
Answer:
Date Account Title Debit Credit
Sept. 1 Cash $1,050
Cash short and over $ 9
Sales $1,059
Cash short and over is calculated thus:
= 1,059 - 1,050
= $9.00
A portfolio with a level of systematic risk that is the same as that of the market has a beta that is equal to one. less than zero. equal to zero. less than the beta of the
Answer:
equal to one.
Explanation:
Systemic risk are risk that are inherent in the economy. They cannot be diversified away. They are also known as market risk. examples of this risk include recession, inflation, and high interest rates. Investors should seek compensation for systemic risk. Systemic risk is measured by beta. The higher beta is, the higher the systemic risk and the higher the compensation demanded for by investors
The market has a beta of one. If a portfolio has the same level of systematic risk that is the same as that of the market, its beta would be equal to 1.
If the portfolio is less risky than the market, its beta would be less than one
If the portfolio is more risky than the market, its beta would be greater than one
Warren Enterprises expects 20,000 unit sales, has ordering costs of $20 per order, carrying costs of $1.00 per unit, and desires to keep 100 units in safety stock. Assuming level production, what should be their average inventory? a. 200-300 b. 301-400 c. 401-500 d. 501-600
Answer:
Option d (501-600) is the correct answer.
Explanation:
Given:
Unit sales,
= 20,000
Ordering costs,
= $20
Carrying costs,
= $1
Safety stocks,
= 100
Now,
The EOQ will be:
= [tex]\sqrt{\frac{2\times Unit \ sales\times Ordering costs}{Carrying \ costs} }[/tex]
By putting the values, we get
= [tex]\sqrt{\frac{2\times 20000\times 20}{1} }[/tex]
= [tex]\sqrt{800000}[/tex]
= [tex]894.43 \ units[/tex]
hence,
The average inventory will be:
= [tex][Safety \ stock +(\frac{EOQ}{2} )][/tex]
= [tex][100+(\frac{894.43}{2} )][/tex]
= [tex][100+447.21][/tex]
= [tex]547.21[/tex] (lies between 501-600)
Thus the above is the correct response.
Your parent offer you the opportunity to invest $ 50,000 in new coffee shop on the existing building on their property. It is located in the city centre. This building has 200m2 of space. Assumed that the project lasts 9 years, opportunity cost of capital is 10%, corporate income tax is ignored.
a. You should make some assumptions and forecast intial investment (cost of reparing old building and purchase of fix assets); operation cash flow (\, price per cup of coffee, number of cups of coffee per year; cost, depreciation, profit and cash flow from operation); and cash flow from changes in working capital.
b. What is NPV of this project? Do you invest this project? Why?
Answer:
no I don't invest this project
Gabbe Industries is a division of a major corporation. Last year the division had total sales of $32,948,550, net operating income of $4,069,146, and average operating assets of $9,027,000. The company's minimum required rate of return is 22%.
Required:
a. What is the division's margin? (Round your percentage answer to 2 decimal places.)
b. What is the division's turnover? (Round your answer to 2 decimal places.)
c. What is the division's return on investment (ROI)? (Round percentage your answer to 2 decimal places.)
Answer:
a. Division's margin = Net operating income / Total sales
Division's margin = $4,069,146 / $32,948,550
Division's margin = 0.1235000
Division's margin = 12.35%
b. Division's turnover = Total sales / Average operating assets
Division's turnover = $32,948,550 / $9,027,000
Division's turnover = 3.65 times
c. Division's return on investment = Division margin * Division turnover
Division's return on investment = 12.35% * 3.65 times
Division's return on investment = 45.08%
On September 1, Year 1, West Company borrowed $50,000 from Valley Bank. West agreed to pay interest annually at the rate of 6% per year. The note issued by West carried an 18-month term. West Company has a calendar year-end. What is the amount of interest expense that will be reported on West's income statement for Year 1
Answer:
$999.90
Explanation:
The interest expenses will be charged for 4 month (September 1 to December 31)
Interest expenses = $50,000 * 6% * 4/12
Interest expenses = $50,000 * 0.06 * 0.3333
Interest expenses = $999.90
So, the amount of interest expense that will be reported on West's income statement for Year 1 is $999.90
Joe believes in providing a work setting and culture that encourage workers to be creative and inspire employees to work hard to achieve company goals. Joe is a(n) _______ manager.
Suppose a company wants to structure its assets and liabilities such that its equity is unaffected by interest rate risk. To accomplish that objective, which of the following must the company do?
a. The duration of its liabilities must be longer than the duration of its assets.
b. The duration of its liabilities must equal the duration of its assets.
c. The duration of its liabilities must be shorter than the duration of its assets.
Answer: b. The duration of its liabilities must equal the duration of its assets
Explanation:
Since the company wants to structure its assets and liabilities such that its equity is unaffected by interest rate risk, then the duration of its liabilities must equal the duration of its assets.
It should be noted that when the duration of its liabilities is shorter than the duration of its assets, the duration gap is positive and when there's a rise in interest rate, the worth of assets will be affected more.
When duration of its liabilities is longer than the duration of its assets, the duration gap is negative and when there's a rise in interest rate, the worth of liabilities will be affected more.
Finally, when the duration of its liabilities is equal the duration of its assets, its equity is unaffected by interest rate risk.
PH produces many electronics products for the USA, Europe, and the UK. The plugs required for each of these geographical areas are different, so originally PH had produced three different versions of each product. Recently, they decided to create one version, and then ship these with three different plugs (i.e., of which two are redundant for the customer). The demands for a particular item for each market are normally distributed with the following parameters: USA – average of 10,000 with a standard deviation of 1,000, Europe – average of 5,000 with a standard deviation of 1,000, and the UK – average of 5,000 with a standard deviation of 500. If PH wants a 90% service level, then how much should their safety stock be according to the new system with one version?
A: Approximately 1,900
B: Approximately 2,500
C: Approximately 3,200
D: Approximately 5,750
Answer:
safety stock=1900
Explanation:
Formula used:
Safety stock= Normsinv(service level) x standard deviation of demand
Solution:
On calculating standard deviation of combined demand using high school maths
standard deviation =[tex]\sqrt{1000^2+1000^2+500^2}[/tex]
Here on calculating the safety stock
Safety stock = Normsinv(0.90)x [tex]\sqrt{1000^2+1000^2+500^2}[/tex]
On simplifying,
Safety stock = 1922
Therefore,
The answer is 1900 units
Option is the correct answer
A. approximately 1900
The difference in the answer may be due to the rounding of standard normal deviation
Winner Corporation acquired 80 percent of the common shares and 70 percent of the preferred shares of First Corporation at underlying book value on January 1, 20X9. At that date, the fair value of the noncontrolling interest in First's common stock was equal to 20 percent of the book value of its common stock. First's balance sheet at the time of acquisition contained the following balances:
Total Assets $600,000 Total Liabilities $90,000
Preferred Stock 100,000
Common Stock 150,000
Retained Earnings 260,000
Total Assets $600,000 Total Liabilities and
Equities $600,000
The preferred shares are cumulative and have a 10 percent annual dividend rate and are four years in arrears on January 1, 20X9. All of the $5 par value preferred shares are callable at $6 per share. During 20X9, Shovel reported net income of $100,000 and paid no dividends.
Required information
Based on the preceding information, what is First's contribution to consolidated net income for 20X9?
a. $80,000
b. $100,000
c. $90,000
d. $50,000
Answer:
b. $100,000
Explanation:
Based on the information given , the FIRST'S CONTRIBUTION TO CONSOLIDATED NET INCOME for 20X9 will be NET INCOME amount of $100,000 because During the year 20X9, the company reported NET INCOME of $100,000 in which they paid no dividends.
Therefore First's contribution to consolidated net income for 20X9 is $100,000
You are considering a stock that is expected to pay dividends during the next five years of $0.50, $0,52, $0,54, $0,56 and $0.58. You estimate that you can sell the stock for $100 at the end of five years. Your required rate of return is 15% and the stock is currently selling for $65. If you purchase the stock, what rate of return do you expect to earn
Answer:
9.7%
Explanation:
The rate of return can be determined using a financial calculator
Cash flow in year 0 = -65
Cash flow in year 1 = $0.50
Cash flow in year 2 = $0.52
Cash flow in year 3 = $0.54
Cash flow in year 4 = $0.56
Cash flow in year 5 = $0.58 + $100
Rate of return = 9.7%
To find the rate of return using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
For a particular maximization problem, the payoff for best decision alternative is $15.7 million while the payoff for one of the other alternatives is $12.9 million. The regret associated with the alternate decision would be
a. $ 2.8 million.
b. $ 28.6 million
c. $ .129 million
d. $ 15.7 million
Answer:
a. $ 2.8 million
Explanation:
Calculation to determine what The regret associated with the alternate decision would be
Using this formula
Regret associate=Payoff for best decision alternative - Payoff for one of the other alternatives
Let plug in the formula
Regret associate= $15.7million - $12.9million
Regret associate= $2.8million
Therefore The regret associated with the alternate decision is $2.8million.
Two items are omitted from each of the following summaries of balance sheet and income statement data for two proprietorships for the year 2020, Tamarisk's Goods and Ivanhoe Enterprises. Determine the missing amounts
Answer:
The solution according to the given query is provided below.
Explanation:
The given question seems to be incomplete. The attachment of the complete query is provided below.
Now,
The additional investment will be:
= [tex]Ending \ owner's \ equity-Beginning \ owner's \ equity+Drawings-Net \ income[/tex]
By putting the values, we get
= [tex]40000-25000+37000-45000[/tex]
= [tex]7,000[/tex]
Now,
The drawings will be:
= [tex]Ending \ owner's \ equity-Beginning \ owner's \ equity+Additional \ investment-Net \ income[/tex]
By putting the values, we get
= [tex]130000-80000-25000-40000[/tex]
= [tex]-15,000[/tex]
Song, Inc., uses the high-low method to analyze cost behavior. The company observed that at 22,000 machine hours of activity, total maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $30.40. On the basis of this information, the fixed cost was:
Answer:
$550,000
Explanation:
The computation of the fixed cost is shown below:
But before that the variable cost per hour is
= (25,000 ×$30.40 - 22,000 × $33.40) ÷ (25,000 - 22,000)
= ($760,000 - $734,800) ÷ (3,000)
= $8.4
Now the fixed cost is
= $760,000 - (25,000 × $8.4)
= $550,000
ncome Statements Segmented by Products Francisco Consulting Firm provides three types of client services in three health-care-related industries. The income statement for July is as follows: FRANCISCO CONSULTING FIRM Income Statement For Month of July Sales $ 820,000 Less variable costs (580,750) Contribution margin 239,250 Less fixed expenses Service $ 85,600 Selling and administrative 70,400 (156,000) Net income $ 83,250 The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows: Hospitals Physicians Nursing Care Sales $340,000 $205,000 $275,000 Contribution margin ratio 25% 35% 30% Direct fixed expenses of service $36,500 $8,500 $18,750 Allocated common fixed service expenses $8,500 $2,500 $4,000 Prepare income statements segmented by client categories. Include a column for the entire firm in the statement.
Answer:
FRANCISCO Consulting Firm
Francisco Consulting Firm
Segmented Income Statement
For the month of July
Hospitals Physicians Nursing Total
Care
Sales $340,000 $205,000 $275,000 $820,000
Variable costs 255,000 133,250 192,500 580,750
Contribution margin ratio $85,000 $71,750 $82,500 $239,250
Direct fixed expenses of service $36,500 $8,500 $18,750 63,750
Allocated common
fixed service expenses 8,500 2,500 4,000 15,000
Unallocated common fixed service expense 6,850
Selling and administrative 29,190 17,600 23,610 70,400
Total expenses $74,190 $28,600 $46,360 $156,000
Net Income $10,810 $43,150 $36,140 $83,250
Explanation:
a) Data and Calculations:
CONSULTING FIRM
Income Statement
For Month of July
Sales $ 820,000
Less variable costs (580,750)
Contribution margin 239,250
Less fixed expenses Service $ 85,600
Selling and administrative 70,400 (156,000)
Net income $ 83,250
The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows:
Hospitals Physicians Nursing
Care
Sales $340,000 $205,000 $275,000
Contribution margin ratio 25% 35% 30%
Direct fixed expenses of service $36,500 $8,500 $18,750
Allocated common fixed service expenses $8,500 $2,500 $4,000
Explain the three system inhibitors of waste, variability and inflexibility and how they can be inefficient to corporations.
Answer and Explanation:
Waste occurs when a company uses inputs that do not add value to their customers. In other words, something customers are not willing to pay for is classified as waste to the company.
Variability is predictability or unpredictability as regards the products of the company. This is what customers expect the products of the company to be like everytime they buy, a certain standard. Example when a customer buys food from a restaurant and expects it to taste the same everytime.
Inflexibility or rigidity occurs when a company isn't flexible enough to adapt easily to customer's expectations such as product mix, changes in demand of their products etc.
These three inhibitors if not handled properly will lead to bad resource management causing customer and employee dissatisfaction.
Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $41,500. The division sales for the year were $950,500 and the variable costs were $470,000. The fixed costs of the division were $522,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be:
Answer:
The impact of eliminating the backpack division
Particulars Amount
Decrease in contribution margin $480,500 ($950500-$470,000)
Decrease in Expenses:
Fixed expenses $208,800 ($70522,000*40%)
Decrease in Net operating income $271,700 (Financial disadvantage)
