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zlopas [31]
3 years ago
13

Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $41,

500. The division sales for the year were $950,500 and the variable costs were $470,000. The fixed costs of the division were $522,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be:
Business
1 answer:
quester [9]3 years ago
3 0

Answer:

 The impact of eliminating the backpack division

Particulars                                           Amount

Decrease in contribution margin      $480,500   ($950500-$470,000)

<u>Decrease in Expenses:</u>

Fixed expenses                                  <u>$208,800 </u>   ($70522,000*40%)

Decrease in Net operating income <u>$271,700</u>      (Financial disadvantage)

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1. D. to participate in the day-to-day operations.
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In your own words....
Amiraneli [1.4K]

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Explanation:

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2 years ago
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0.9717 per unit sold (approx)

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