Question

The operations of Bridgeton Corporation are divided into the Adams Division and the Carter Division. Projections for the next year are as follows: Adams Division Carter Division Total Sales$575,000 $342,000 $917,000 Variable costs 199,000 157,000 356,000 Contribution margin$376,000 $185,000 $561,000 Direct fixed costs 171,000 143,000 314,000 Segment margin$205,000 $42,000 $247,000 Allocated common costs 82,000 66,000 148,000 Operating income (loss)$123,000 $(24,000) $99,000 Operating income for Bridgeton Corporation as a whole if the Carter Division were dropped would be:

Answer 1

$57,000

Step-by-step explanation:

The computation of the operating income for Bridgeton Corporation dropped by

= Sales of Adams division - variable cost of Adams division - direct fixed cost of Adams division - allocated common cost of Adams division - allocated common cost of Carter Division

= $575,000 - $199,000 - $171,000 - $82,000 - $66,000

= $57,000

Since we have to determine the reduced operating income so we take the total of allocated common stock and rest of the items are taken from Adams division