Product (Segment) elimination decision. The Kelsh Company has two divisions--North and South. The divisions have...
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Product (Segment) elimination decision. The Kelsh Company has two divisions--North and South. The divisions have the following revenues and expenses:
North
South
Sales
$900,000
$800,000
Variable expenses
450,000
300,000
Traceable fixed expenses
260,000
210,000
Allocated common corporate expenses
240,000?
190,000
Net operating income (loss)
($50,000)
$100,000
Management at Kelsh is pondering the elimination of the North Division. If the North Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected.
Given this data, the elimination of the North Division would result in an overall company operating income of:
A. 50,000
B. 150,000
C. (140,000)
D. 100,000
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