Question

Sales $ 576,000 $ 491,500 Variable costs 189,000 260,500 Traceable fixed costs 173,500 196,400 Allocated common corporate costs 123,900 143,100 Net operating income (loss) $ 89,600 $ (108,500 ) The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of

Answer 1

$(18,900)

Step-by-step explanation:

Calculation to determine what the elimination of the West Division would result in an overall company net operating income (loss)

Using this formula

Net operating income (loss) = Net operating income of East division -Allocated common cost to West division

Let plug in the formula

Net operating income (loss)= $ 89,600 - $108,500

Net operating income (loss)= $(18,900)

Therefore the elimination of the West Division would result in an overall company net operating income (loss) of $(18,900)