Question: Why does downsizing a company by closing segments that report accounting loss often leads to decrease in profits for the company rather than an increase?

Why does downsizing a company by closing segments that report accounting loss often leads to decrease in profits for the company rather than an increase?

Common fixed costs allocated to the segment being closed

Excessive reserves taken in previous years

Direct material costs associated with the segment being closed

Additional restructuring costs due to closure of a segment

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

1. In the case of Edison Schools, explain why the SEC issued an AAER even though it did not find that Edison's revenue recognition practices did not contravene GAAP. 2- Describe and compare...

Q:

1. In the case of Edison Schools, explain why the SEC issued an AAER even though it did not find that Edison's revenue recognition practices did not contravene GAAP. 2- Describe and compare...

Q:

Explain why downsizing a company by closing segments or product lines that report an accounting loss often leads to a decrease in profits rather than an increase.

Q:

Please see the attached file for the fifty multiple choice questions. 1. A precondition for effective capital budgeting requires having: A) B) C) D) 2. A clearly defined mission A well-defined...

Q:

Explain why downsizing by closing segments that report an accounting loss often leads to a decrease in profits, rather than an increase.

Q:

BIGBRAND INC. BigBrand Inc. is an American company specializing in manufacturing and delivering home and office furnishings. The company operates in the U.S. Midwest with four production facilities...

Q:

6316 .III '45\" E} G) v2.cengagenow.com [I] Mastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the most important items reported by a...

Q:

PART A: Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company's direct fixed costs can be avoided if...

Q:

You will write a thorough analysis of Verizon Communications Inc. (VZ)'sannual report. The report should contain professional terminology as well as proper grammar and spelling. Please don't CUT and...

Q:

You will write a thorough analysis of a company's annual report. The report should contain professional terminology as well as proper grammar and spelling. Please don't CUT and PASTE from web sites...

Q:

Now you have the opportunity to analyze what has been discussed and to provide your critical analysis of the contemporary research. You have already identified organizations facing issues. In a...

Q:

Augusta Pacific Inc. (API), which uses IFRS, had the following events and transactions for its year ended December 31, 2021: March 1 - Purchased 1,000 common shares of Rogers Corp. (Rogers) for...

Q:

With fixed exchange rates, what impact does an expansionary monetary policy have on the nation's BOP? What about a contractionary monetary policy?

Q:

What kind of Decision making is preferred in the Global Organization? a . Informal b . Centralized c . Decentralized d . Decentralized at Top and centralized at Functional Level.

Q:

Check with the EEOCs website and compile a list of the biggest financial settlements this past year for retaliation claims. About how much was the average claim?

Q:

Why is it important for companies today to make their human resources into a competitive advantage? Explain how HR can contribute to doing this. What are some examples of employers that do this?

Q:

Based on the few facts that you have, what steps could Garden management have taken to protect itself from liability in this matter?