Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs...
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Accounting
Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs based on division sales. If the Commercial division is droppped, $100,000 of its fixed costs are avoidable. As a consequence of dropping the Commercial division, Sammys total income would be:
Garden
Farm
Commercial
Sales
$ 678,000
$ 920,000
$ 692,000
Variable costs
372,900
414,000
649,800
Contribution margin
305,100
506,000
42,200
Fixed costs
247,200
335,500
252,400
Net income (loss)
57,900
170,500
(210,200)
Multiple Choice
a. $18,200
b. $228,400
c. $76,000
d. $118,200
e. $57,800
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