A company with sales of $50,000, variable costs of $35,000, and fixed costs of $25,000 will earn a net income of $15,000
True or False?
A company with sales of $50,000, variable costs of $35,000, and fixed costs of $25,000 will earn a net income of $15,000
True or False?
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13. | Western Apparel Company owns two stores and management isconsidering eliminating the East store due to declining sales.Segmented contribution income statements are as follows and commonfixed costs are allocated on the basis of sales.
Western feels that if they eliminate the East store that salesin the West store will decline by 25%. If they close the Eaststore, overall company net income will: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A) | decline by $90,000. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B) | decline by $85,625. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C) | decline by $74,375. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D) | decline by $63,500. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
