Carlton Corporation is composed of five divisions. Each division is allocated a share of Carlton's overhead to make divisional managers aware of the cost of running the corporate headquarters. The following information relates to the Metro Division:

Sales revenue $ 7,500,000
Variable operating costs 5,100,000
Traceable fixed operating costs 1,900,000
Allocated corporate overhead 300,000
If the Metro Division is closed, 100% of the traceable fixed operating costs can be eliminated. What will be the impact on Carlton's overall profitability if the Metro Division is closed?
Select one:
A. Decrease by $2,400,000.
B. Decrease by $2,100,000.
C. Decrease by $500,000.
D. Decrease by $200,000.
E. None of the answers is correct.

Answer rating: 100% (QA)

Decrease in operating income by Financial disadvantage 500000 Working notes Evaluati... View the full answer