Question: Sales Variable costs Contribution margin DTFC Segment Margin Common fixed costs Net Income Profit Center X $ 90,000 50,000 40,000 10,000 30,000 5,000 $25,000 Profit
Sales Variable costs Contribution margin DTFC Segment Margin Common fixed costs Net Income Profit Center X $ 90,000 50,000 40,000 10,000 30,000 5,000 $25,000 Profit Center Y $150,000 120,000 30,000 35,000 (5,000) 5,000 $(10,000) Profit Center Z $200,000 100,000 100,000 50,000 50,000 5,000 $45,000 Total $440,000 270,000 170,000 95,000 75,000 15,000 $60,000 24. Management is considering dropping Profit Center X. If Profit Center X is discontinued, the selling price in profit center Z will be increased to compensate for the relevant income lost from discontinuing Profit Center X. What is the minimum percentage increase that is needed in Profit Center Z's selling price? a. 5%. b. 10% c. 15% d. 20%
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