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  3. a segment of a company reports the following loss

A segment of a company reports the following loss for the year. All $140,000 of...

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Accounting

A segment of a company reports the following loss for the year. All $140,000 of its variable costs are avoidable, and $75,000 of its fixed costs are avoidable.

Segment Income (Loss)
Sales $ 200,000
Variable costs 140,000
Contribution margin 60,000
Fixed costs 80,000
Income (loss) (20,000)

(a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated?

Complete this question by entering your answers in the tabs below.

  • Required A
  • Required B

Compute the income increase or decrease from eliminating this segment.

Segment Elimination Analysis Continue Eliminate Income Increase (Decrease)
Sales $200,000
Variable costs 140,000
Contribution margin 60,000
Fixed costs 80,000
Income (loss) $(20,000)

  • Required B

Should the segment be eliminated?

Should the segment be eliminated?

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