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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.

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Answer:

A) The presidents' calculation is wrong because he is dividing the total cost by the number of students. He is not taking into account the effect of fixed cost in the cost structure. The university should accept more students so the fixed costs will distribute in a larger number of students.

B) Fixed costs= $18000000

Explanation:

Giving the following information:

Midstate University is trying to decide whether to allow 100 more students to the university.

Tuition is $5000 per year.

The controller has determined the following schedule of costs:

- 4000 students= $30,000,000

- 4100students=  $30,300,000

- 4200 students=  $30,600,000

- 4300 students= $30,900,000

The current enrollment is 4200 students.

A) The presidents' calculation is wrong because he is dividing the total cost by the number of students. He is not taking into account the effect of fixed cost in the cost structure. The university should accept more students so the fixed costs will distribute in a larger number of students.

B) Every 100 students the costs increase by $300000. This means that each student increase costs by $3000.

Fixed costs= Total cost - variable cost* number of students

Fixed costs= 30600000 - 4200*3000= $18000000

6 0
3 years ago
Warren opened a new computer store in town. When customers purchase a computer from his store, they automatically receive an ext
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Answer:

D.

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​If, in the long​ run, real GDP returns to its potential​ level, then in the long​ run, A. the Phillips curve represents a struc
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Answer:

C. the Phillips curve is vertical

Explanation:

Philips Curve shows the inverse relationship between inflation rate & unemployment level. High inflation rate implies low unemployment rate; and low inflation rate implies high inflation rates. Economic growth (output rise) leads to inflation & reduces unemployment ; Economic slowdown (output fall) leads to deflation & increases  unemployment.  

However; In long run, real GDP (output level) returns to its potential​ level. So; output level defining the inverse relationship (trade off) between inflation rate & unemployment level, is stable. Hence, inflation rate & unemployment level have no inverse (trade off) relationship & they are unrelated. Therefore, the long run Phillips curve is vertical.  

7 0
3 years ago
Read 2 more answers
Questions<br>why do we need to understand the idea of culture, society and<br>politics?​
My name is Ann [436]

Answer:

Because the all works that we did done and thinks to doing need some rules. Every thing in this world pepole looks this is wrong. We have to understand our culture because we live in the frame. The frame is culture anyone cqnt change it. Political like a game. Every politicions working for luxury life. They never think about the denziens of their country. As i think this is rhw reasone to understand the political.Socity is very diffrent. Always it full of curropution. we have to carefull of our self always.

So this is my answer you can add some to your self..

4 0
3 years ago
Contribution Margin Molly Company sells 37,000 units at $19 per unit. Variable costs are $11.59 per unit, and fixed costs are $1
yarga [219]

Answer:

(a) Contribution margin ratio = 0.39, or 39%

(b) the unit contribution margin = $7.4 per unit

(c) income from operations = $164,470

Explanation:

Total revenue = 37,000 × $19 = $703,000

Total variable cost = 37,000 × $11.59 = $428,830

Margin = $703,000 - $428,830 = $274,170

(a) the contribution margin ratio

Contribution margin ratio = $274,170/$703,000 = 0.39, or 39%

(b) the unit contribution margin

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(c) income from operations

Income from operations = $274,170 - $109,700 = $164,470

5 0
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