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The Cook Corporation has two divisions--East and West. The divisions have the following revenues and...

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Accounting

The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:

East West
Sales $ 603,000 $ 506,000
Variable costs 231,000 300,000
Traceable fixed costs 151,500 192,000
Allocated common corporate costs 128,600 156,000
Net operating income (loss) $ 91,900 $ (142,000 )

The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:

Multiple Choice

$91,900

$(64,100)

$(142,000)

$(50,100)

Answer & Explanation Solved by verified expert
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