80.2K

Verified Solution

Link Copied!

Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped, $112,000 of the feed costs allocated to it could be eliminated. The impact on Sammy's operating income from eliminating the commercial division would be: Sales Variable costs Contribution margin Fixed costs Net income (loss) Garden $682,000 384,900 297,100 259,200 37,900 Farm $956,000 426,000 530,000 347,500 182,500 Commercial $728,000 661,800 66,200 292,400 (226, 200) Multiple Choice $2,200 decrease $33,000 increase $45,800 increase $11,000 increase S45,800 decrease Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $58,000 for the past year, Kitchen division sales for the year were $1,090,000, and its variable costs were $780,000. The fixed costs of the division were $321,000. If the kitchen division is dropped, 65% of the fixed costs allocated to it could be eliminated. The impact on Valdez's operating income from eliminating this business segment would be $101,350 decrease $263,000 increase $345,350 decrease $101,350 increase S263,000 decrease Galla Inc. needs to determine a price for a new product. Galla desires a 25% markup on the total cost of the product Galla expects to sell 7820 units. Additional information is as follows: Variable product cost per unit Variable administrative cost per unit Total fixed overhead Total fixed administrative 47,900 6,840 Using the total cost method what price should Galla charge? Multiple Choice $104.00 $95.00 $10.00 S78.00 $90.00

Answer & Explanation Solved by verified expert

See Answer