The following information relates to next year's projected operating results of the Children's Division of Grunge Clothing Corporation: If the Children's Division is eliminated, $170,000 of the above fixed expenses could be avoided. The annual financial advantage (disadvantage) for the company of eliminating this division should be:
A) ($300,000)
B) $30,000
C) ($30,000)
D) $300,000

Question

The following information relates to next year's projected operating results of the Children's Division of Grunge Clothing Corporation:  If the Children's Division is eliminated, $170,000 of the above fixed expenses could be avoided. The annual financial advantage (disadvantage) for the company of eliminating this division should be:
A) ($300,000) 
B) $30,000 
C) ($30,000) 
D) $300,000

Quizplus · Accepted Answer

11eacbfc_c633_9e47_8ffe_219934ec5549_TB7552_00 The company would lose the $30,000 positive segment margin if the Children's Division is eliminated.

The Following Information Relates to Next Year's Projected Operating Results