A recent accounting graduate from Marvel State University evaluated the operating perfomance of Fanning Company's...
70.2K
Verified Solution
Link Copied!
Question
Accounting
A recent accounting graduate from Marvel State University evaluated the operating perfomance of Fanning Company's four divisions. The following presentation was made to Fanning's Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $60,000. (See analysis below.) Other Three Southern Division Total Divisions s 2,000,000 950,000 1,050,000 800,000 $ 250,000 $480,000 400,000 80,000 140,000 s (60,000) Sales Cost of Goods Sold Gross Profit Operating Expenses Net Income 2,480,000 1,350,000 1,130,000 940,000 $190,000 For the other divisions, cost of goods sold is 80% variable and operating expenses are 70% variable. The cost of goods sold for the Southern Division is 30% fixed, and its operating expenses are 75% fixed. If the division is eliminated, only $15,000 of the fixed operating costs will be eliminated
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
