1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
vova2212 [387]
3 years ago
13

Dudley Transport Company divides its operations into four divisions. A recent income statement for its West Division follows. DU

DLEY TRANSPORT COMPANY West Division Income Statement for Year 3 Revenue $ 300,000 Salaries for drivers (210,000 ) Fuel expenses (30,000 ) Insurance (42,000 ) Division-level facility-sustaining costs (24,000 ) Companywide facility-sustaining costs (78,000 ) Net loss $ (84,000 ) Required By how much would companywide income increase or decrease if West Division is eliminated
Business
1 answer:
Ghella [55]3 years ago
4 0

Answer:

Companywide income would increase by $6,000 if West Division is eliminated.

Explanation:

The amount by which the companywide income will increase or decrease if West Division is eliminated can be determined by comparing Revenue with avoidable cost.

Avoidable cost refers to the cost that will be eliminated or not incurred if a firm decides to change the course of a business.

In this question, avoidable cost is simply the cost or expenses that will be eliminated if West Division is eliminated.

Among all the expenses in the question, only Companywide facility-sustaining costs which is $78,000 cannot be eliminated if West Division is eliminated.

Therefore, avoidable cost can be calculated as follows:

Avoidable cost = Salaries for drivers + Fuel expenses + Insurance + Division-level facility-sustaining costs = 210,000 + 30,000 + 42,000 + 24,000 = $306,000

Since, Revenue = $300,000

Decision rule:

1. If revenue is greater than avoidable cost, we have a decrease in income. Therefore, the division should not be eliminated.

2. If revenue is less than avoidable cost, we have an increase in income. Therefore, the division should be eliminated.

Since the revenue of $300,000 is less than the avoidable cost of $306,000, it implies we have an increase in income based on the decision rule 2. The increase in income is calculated as follows:

Increase in income if West Division is eliminated = Avoidable cost – Revenue = $306,000 - $300,000 = $6,000

Therefore, companywide income would increase by $6,000 if West Division is eliminated

Since there would be an increase in income of $6,000, West Division should therefore be eliminated.

You might be interested in
Assume that shareholder's required rate of return (r) is 9%. Dr. Pepper is expected to pay a dividend of $2.00 per share (D1) ne
Juli2301 [7.4K]

Answer:

P=$40

Explanation:

We will apply constant dividend growth model that is =P = D1 / ( k-g )

P is the price of share  ?

D1 is the current divided  $2

k is the rate of return       9%

G is the constant growth  4%

P=2/(9%-4%)

P=$40

3 0
3 years ago
In a _____ situation, the buying center is likely to proceed through all six steps in the buying process and involve many people
Masteriza [31]
In a NEW BUY situation, the buying center is likely to proceed through all six steps in the buying process and involve many people in the buying decision.

A new buy situation occurs when the customer buys goods or service for the first time. Because of this, the buying decision is quite involved to the extent of going through the six steps of the buying process.
8 0
3 years ago
In a business-to-business transaction, the seller offers the buyer a 2 percent discount for paying a bill early. Assuming the us
chubhunter [2.5K]

Assuming the user took advantage of this offer, the amount that would be discounted on a $10,000 invoice is: $200.

<h3>Discounted amount </h3>

Using this formula

Discounted amount =Discount rate× Invoice

Let plug in the formula

Discounted amount=2%×$10,000

Discounted amount=$200

Therefore assuming the user took advantage of this offer, the amount that would be discounted on a $10,000 invoice is: $200.

Learn more about Discounted amount  here:brainly.com/question/12965533

#SPJ1

8 0
1 year ago
Why are pricing decisions important to organization?
gregori [183]

Answer:

  • Pricing is important since it defines the value that your product are worth for you to make and for your customers to use.
8 0
2 years ago
Which of the following is a fixed cost?
Mice21 [21]

Answer:

The answer is d. payment to hire a security worker to guard the gate to the factory around the clock.

Explanation:

Let re-visit to the concept of Fixed cost before applying to the questions.

Fixed costs are costs which are unchanged given changes in production level.

a. payment to a electric utility is not fixed cost because higher level of production required higher electricity consumption which leads to higher cost of electricity.

b. cost of raw material is not fixed cost because the higher the production level, the higher the raw material required for production.

c. wages to hire assembly line workers is not fixed cost because the higher the production level, the more workers required and the higher the wages will be.

d. payment to hire a security worker to guard the gate to the factory around the clock is fixed cost because regardless of the production level, the security worker will work for the same amount of time and receive the same level of payment as his workload is much likely to remain the same.

So, d is the correct choice.

3 0
3 years ago
Other questions:
  • Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives.
    8·1 answer
  • Dallas Snow Removal's cost formula for its vehicle operating cost is $2,060 per month + $306 per snow-day. For the month of Janu
    8·1 answer
  • A narrative report is a type of inspection report that's
    15·1 answer
  • Which of the five competitive forces is influencing a passenger train line, when a new automobile manufacturer causes a reductio
    6·1 answer
  • Tolino Company signed a 5-year note payable on January 1, 2019, of $200,000. The note requires annual principal payments each De
    15·1 answer
  • Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run fluctuations in rea
    11·1 answer
  • Haruto Kawa, a Japanese citizen who works for Shin-Ro Corp. in Japan, has been asked to head the company's sales office in the U
    14·1 answer
  • Scanner-based research is a system of gathering information from a group of respondents by continuously monitoring the promotion
    15·1 answer
  • Dearborn Company has earnings per share of $2.80, it paid a dividend of $2.10 per share, and the market price of the company's s
    11·1 answer
  • When shipments from a number of sources are combined into one larger shipment going to a single location, the operation is known
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!