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After reviewing financial reports of her company's daycare service, Kara determines it should be closed...

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Accounting

After reviewing financial reports of her company's daycare service, Kara determines it should be closed due to an almost $40,000 loss.

Revenues $120,000

Variable costs 45,000

Traceable (avoidable) fixed costs 70,000

Allocated corporate overhead 45,000

1. Do you agree? Compute the net impact on Net Income of closing. Note a loss as a negative number, a gain as a positive number.

2. What amount if any should she ignore? State costs as negative, revenue as positive.

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