Question

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

Answer: ($43,300)

Step-by-step explanation:

Hello.

Your question is incomplete as it lacks the first part.

Parrain to the rescue I guess.

I have attached the complete question.

Right then.

We can see that the net income for the East Division is $113,700.

If we were to eliminate West Division, it is said that its traceable fixed costs could be avoided but Total common corporate costs would be unaffected by this decision.

Since that is the case then we can simply subtract the Total common corporate costs from East Division's Net Income to find out the Overall Company Profit (loss).

= 113,700 - 157,000

= -$43,300

The elimination of the West Division would result in an overall company net operating (loss) of ($43,300)