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Liula [17]
3 years ago
13

A study has been conducted to determine if one of the departments in MSU Company should be discontinued. The contribution margin

in the department is $50,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, MSU's overall net operating income would:
a. decrease by $25,000 per year.

b. increase by $25,000 per year.

c. decrease by $10,000 per year.

d. increase by $10,000 per year.
Business
1 answer:
SOVA2 [1]3 years ago
4 0

Answer:

c. decrease by $10,000 per year.

Explanation:

The contributing margin of a business is sales revenue less the variable cost to produce the product

Contributing margin refers to the profit that is free to be used by the business to pay fixed costs and reserve as net profit.

In this scenario if the department is discounted the fixed expense will reduce by $40,000

This implies that the net income will increase by $40,000 if the department is discontinued.

If the department is discontinued income from the department will reduce by $50,000. That is -$50,000

Net income= -50,000 + 40,000= -$10,000

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Complete Question:

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LO 7.3 Fit band's estimated sales are:

                                                                    $

OCTOBER                                         131,982

NOVEMBER                                         195,723

DECEMBER                                         249,283

JANUARY                                         124,298

FEBRUARY                                         124,284

MARCH                                                  124,373

What are the balances in accounts receivable for January, February, and March if 65% of sales is collected in the month of sale, 25% is collected the month after the sale, and 10% is second month after the sale?

Answer:

                                                           JANUARY   FEBRUARY   MARCH

Amount received from November sales    19,572

Amount received from December sales    62,321        24,928  

Amount received from January sales        80,794        31,075       12,430

Amount received from November sales  <u>               </u>     <u>              </u>      <u> 31,071 </u>

TOTAL                                                     <u>$162,687 </u>    <u>$56,003</u>     <u>$43,501 </u>

<u />

Explanation:

The balances calculated are based on the following formula:

Amount received = Sales Figure of that month * Percentage

65% in the month of sale is received, 25% in the next month and the residual is received in the second month after sales

For the month of November:

65% of its total sales will be received in november, 25% in the next month(December) and the residual 10% in the second month after sale(January). Likewise for the month of January, we see in the computation that 65% of sales was received in the same month, 25% in the next month February and the residual 10% in the second after sale which is in March.

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On January 1, 2008, Pacer Company paid $1,920,000 for 60,000 shares of Lennon Co.’s voting common stock which represents a 45% i
Fittoniya [83]

Answer:

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Explanation:

In order to calcuate the balance in the Investment in Lennon Co.account found in the financial records of Pacer as of December 31, 2008 we would have to calculate the following formula:

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