Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. modern company has four divisions. the budgeted re

Modern Company has four divisions. The budgeted revenues and expenses for each division for 2021...

50.1K

Verified Solution

Question

Accounting

image
Modern Company has four divisions. The budgeted revenues and expenses for each division for 2021 follows: Division B D Sales $504,000 $948,000 $960,000 $1,240,000 Cost of goods sold 440,000 930,000 765.000 925.000 Selling & admin costs 96,000 202,500 144,000 210,000 Operating income (loss) S(32,000) S(184,500) 551.000 $105.000 Further analysis of costs reveals the following percentages of variable costs in each division: ABCD Cost of goods sold 90%80%90%85% Selling & admin costs 50% 50% 60% 60% Closing down any division would result in a savings of 40% of the fixed costs of that division. Required: 1. Calculate the increase or decrease in operating income if Modern Company closes division B using the below table: litem 2. What factors should the top management of Modern Company consider before making a decision

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students