80.2K
Verified Solution
Link Copied!
Market Incorporated has two divisions, Talbot and Heather. The following is the income statement for the past month:
| | Talbot | Heather | Total |
| Sales revenue | $ 348,600 | $ 232,400 | $ 581,000 |
| Variable costs | 290,900 | 58,100 | 349,000 |
| Contribution or segment margin* | $ 57,700 | $ 174,300 | $ 232,000 |
| Common fixed costs (allocated) | 129,840 | 86,560 | 216,400 |
| Net operating income (loss) | $ (72,140) | $ 87,740 | $ 15,600 |
*Note that there are no direct fixed costs.
What would Market's income (loss) be if the Talbot Division was dropped and all common fixed costs are unavoidable?
Multiple Choice
$72,140 loss
$42,100 loss
$87,740 profit
$232,000 profit
Answer & Explanation
Solved by verified expert
