Pumila Zinnia Company has two departments-Department A and Department B. The company's most recent contribution...
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Pumila Zinnia Company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 800,000 320,000 480,000 400,000 $ 80,000 Department Department A B $ 350,000 120,000 230,000 140,000 $ 90,000 $ (10,000) $ 450,000 200,000 250,000 260,000 The company says that $130,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 9%. What is the financial advantage (disadvantage) of discontinuing Department B? 
Pumila Zinnia Company has two departments-Department A and Department B. The company's most recent contribution format income statement lollows: The company says that $130,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 9%. What is the financial advantage (disadvantage) of discontinuing Department B
Pumila Zinnia Company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 800,000 320,000 480,000 400,000 $ 80,000 Department Department A B $ 350,000 120,000 230,000 140,000 $ 90,000 $ (10,000) $ 450,000 200,000 250,000 260,000 The company says that $130,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 9%. What is the financial advantage (disadvantage) of discontinuing Department B?
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