Games Inc. has two product lines, online games and in-store games. They are considering dropping the...

 

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Games Inc. has two product lines, online games and in-store games. They are considering dropping the in-store games divisions so they can focus on online games. Below is a segmented income. statement for the in-store games division. Sales Variable expenses Contribution margin Administrative expenses General expenses Net income $ 121,000 90,600 30,400 18,990 21,600 $ (10,190) Of the general expenses, $15,500 are for rent and maintenance, which would not be eliminated if the in-store segment were dropped. The remaining general expense are traceable to the in-store games division and would be eliminated. If the in-store division were dropped, what would be the effect on the company related to general expenses? Games Inc. has two product lines, online games and in-store games. They are considering dropping the in-store games divisions so they can focus on online games. Below is a segmented income. statement for the in-store games division. Sales Variable expenses Contribution margin Administrative expenses General expenses Net income $ 121,000 90,600 30,400 18,990 21,600 $ (10,190) Of the general expenses, $15,500 are for rent and maintenance, which would not be eliminated if the in-store segment were dropped. The remaining general expense are traceable to the in-store games division and would be eliminated. If the in-store division were dropped, what would be the effect on the company related to general expenses?

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