Discontinue a Segment
Esther Corporation has the following three divisions, Alpha, Bravo and Charlie.
Determine whether or not Charlie Division should be discontinued.  All fixed costs
are unavoidable.
			Alpha	Bravo	Charlie	Total
Sales			500,000	450,000	600,000	1,550,000
Cost of Goods Sold
Variable			200,000	150,000	300,000	650,000
Fixed			50,000	50,000	100,000	200,000
Total CGS			250,000	200,000	400,000	850,000
Gross Margin			250,000	250,000	200,000	700,000
Operating Expenses
Variable			175,000	200,000	200,000	575,000
Fixed			25,000	25,000	25,000	75,000
Total Operating Expenses			200,000	225,000	225,000	650,000
Net Income			50,000	25,000	(25,000)	50,000

Answer rating: 100% (QA)

To determine whether Charlie Division should be discontinued or not we need to analyze its contribut... View the full answer