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nikdorinn [45]
3 years ago
8

Vegas Company is considering eliminating an unprofitable segment. The segment’s fixed costs are avoidable and are less than its

contribution margin. Which of the following is a true consequence of eliminating this unprofitable segment?A.Overall net income will decrease.B.Overall fixed costs will increase.C.Overall contribution margin will increase.D.Overall variable costs will increase.
Business
2 answers:
Advocard [28]3 years ago
7 0

Answer:

A. Overall net income will decrease.

Explanation:

When the contribution margin of an unprofitable segment is less than the fixed costs, the net income of the company will increase if it eliminates that unprofitable segment.

However, it is not advisable to eliminate an unprofitable segment if its contribution margin is greater than the fixed costs, because it will be contributing to the recovery of the fixed costs it is not eliminated. But if it is eliminated, the overall net profit of the company will decrease due to the loss of contribution to the recovery of the fixed costs from the eliminated segment.

Therefore, the true consequence of eliminating the unprofitable segment by Vegas Company is that its overall net income will decrease.

Paraphin [41]3 years ago
3 0

Answer:

Option A,overall net income will decrease

Explanation:

The rule is that an unprofitable segment should be eliminated if its contribution is negative or zero.

In other words, a good justification for closing up an unprofitable segment of a business is when its contribution(sales-variable costs) is equal to or less than the fixed costs

If Vegas Company closes the unprofitable segment the overall net income will decrease because the segment's contributes to recovery of fixed costs since its contribution margin is more than its fixed costs,hence closing it brings about increased costs and reduced net income

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3 years ago
Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The avera
Lilit [14]

Answer:

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Explanation:

Giving the following information:

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Ending Inventory= $46,300

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6 0
3 years ago
Stockholders, employees and environmentalists are examples of stakeholders whose interests
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7 0
2 years ago
PLEASE HELPPP
motikmotik
Answer:
I envision myself 10 years from now in a beautiful 2 story house. A nice luxury sports car, and I envision myself being a Real Estate agent.
I would like to be Independent, and learn what is it like to live on my own. And learn new things. I will need to pay for things like: Electricity, Gas, Water, and food. I'll need a stable job, and a reliable car.
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It would be 14,400, without taxes.
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I will be within my Budget, I will be able to afford everything that I need.

I could learn from others who have been successful in their life. And I could work my way up into a company, or make my own based off of the knowledge that I gained from learning from others.

If I stick to a budget, I will have money left over. And it will teach me to be more responsible with my money and it will also teach me to save.

Whenever I could.

Explanation: You can change it, if you want.

4 0
1 year ago
Billings Company has the following information available for September 2017.
kumpel [21]

Answer:

Part a

Contribution Margin = 29.95% (2 d.p)

Part b

                             Billing Company

                 CVP Income for as at September 2017

                                                      Total                      Per Unit

                                                         $                               $

Sales                                          295704                       444

Less Variable Costs                  (138084)                      (311)

Contribution                               157620                        133

Fixed Costs                                 (59850)                     89.86

Net Income                                  97770                       43.14

Part c

Billing`s break even point is 450 units

Part d

                                    Billing Company

     CVP Income for as at September 2017 - Break Even Point

                                                      Total                      Per Unit

                                                         $                               $

Sales                                           199800                       444

Less Variable Costs                  (139950)                      (311)

Contribution                                59850                        133

Fixed Costs                                 (59850)                      133

Net Income                                       0                              0

Explanation:

Part a

Contribution Margin = Contribution/Sales × 100

Therefore contribution margin is  ($444-$311)/$444 * 100 = 29.95% (2 d.p)

Part b

Sales - Variable Cost = Contribution

Net Income  =   Contribution - Total Fixed Costs                            

Part c

Break Even Point is when Billings neither makers a profit or loss.

Break Even Point ( Units) = Total Fixed Cost/Contribution per unit

Therefore Break Even Point (Units) = $59850/$133 = 450 units

Part d

The total and unit CVP should neither reflect a profit or loss at a capacity of 450 units as this is the break even point. In this case profit = nill

7 0
3 years ago
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