Management is considering dropping profit center B. The discontinuation of profit center B would:

a.	increase Paxton’s net income by $10,000.
b.	increase Paxton’s net income by $5,000.
c.	decrease Paxton’s net income by $5,000.
d.	decrease Paxton’s net income by $10,000.

Management is considering dropping profit center A. If it is discontinued, sales in profit center C will increase by 40%. The discontinuation of profit center A would:

a.	increase Paxton’s net income by $15,000.
b.	increase Paxton’s net income by $10,000.
c.	increase Paxton’s net income by $20,000.
d.	increase Paxton’s net income by $25,000.

Management is considering dropping profit center C. If it is discontinued, the selling price in profit center A will increase by 70%. The discontinuation of profit center C would:

.	a. increase Paxton’s net income by $13,000.
	b. increase Paxton’s net income by $16,000.
	c. increase Paxton’s net income by $12,000. d. increase Paxton’s net income by $8,000.

 

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Profit Center Profit Center Profit Center А B C Total Sales $90,000 $150,000 $200,000 $440,000 Variable costs 50,000 120,000 100,000 270,000 Contribution 40,000 30,000 100,000 170,000 margin DTFC 10.000 90.000 35.000 45.000 Segment Margin 30,000 (5,000) 55,000 80,000 Common fixed costs 5.000 5.000 5.000 15.000 Net Income $25,000 $(10,000) $50,000 $65,000 Profit Center Profit Center Profit Center А B C Total Sales $90,000 $150,000 $200,000 $440,000 Variable costs 50,000 120,000 100,000 270,000 Contribution 40,000 30,000 100,000 170,000 margin DTFC 10.000 90.000 35.000 45.000 Segment Margin 30,000 (5,000) 55,000 80,000 Common fixed costs 5.000 5.000 5.000 15.000 Net Income $25,000 $(10,000) $50,000 $65,000

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Answer please like the answer and keep supporting Thank you 1 b Increase Paxtons net income by 5000 2 b Increase Paxtons net income by 10000 3 d Incre... View the full answer