Question

A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 40% of the indirect fixed costs are avoidable. Based on this information, should the division be eliminated?
Total
Sales . . . . . . . . . . . . . . . . . $200,000
Variable costs. . . . . . . . . . 145,000
Fixed costs
Direct. . . . . . . . . . . . . . 30,000
Indirect. . . . . . . . . . . . . 50,000
Operating loss . . . . . . . . . $(25,000)


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  • CreatedApril 23, 2015
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