Question

The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:__________. East West Sales $ 570,000 $ 478,500 Variable costs 238,000 327,300 Traceable fixed costs 172,500 147,600 Allocated common corporate costs 128,300 163,200 Net operating income (loss) $ 31,200 $ (159,600 ) 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:________.a. $31,200 b. $(132,000) c. $(159,600) d. $(128,400)

Answer 1

b. $(132,000)

Step-by-step explanation:

west

Sales 478500

less: variable costs 327300

Contribution margin 151200

less: Traceable fixed costs 147600

Effect on net operating income 3600

company present net operating

loss is (-159600 + 31200) -128400

less: Dropping the west Division

would reduce net operating

income by 3600

The overall company net

operating loss would be -132000