Question: Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line. Revenue from Barbecue Division sales $ 520,000 Salaries for
Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line.
| Revenue from Barbecue Division sales | $ | 520,000 | ||
| Salaries for Barbecue Division workers | (120,000 | ) | ||
| Direct material | (330,000 | ) | ||
| Sunk costs (equipment depreciation) | (80,000 | ) | ||
| Allocated company-wide facility-sustaining costs | (60,000 | ) | ||
| Net loss | $ | (70,000 | ) | |
If Barbecue Division were eliminated, profitability would
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