Use the following information to answer the following Questions
The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:

In addition, the company incurred common fixed costs of $18,000.
-Which of the following amounts should be used to evaluate whether Restin, Inc., should continue to invest company resources in the Los Angeles division?
A) $4,000.
B) $8,000.
C) $10,000.
D) $25,000.
E) $90,000.

Question

Use the following information to answer the following Questions
The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:

In addition, the company incurred common fixed costs of $18,000.
-Which of the following amounts should be used to evaluate whether Restin, Inc., should continue to invest company resources in the Los Angeles division?
A) $4,000. 
B) $8,000. 
C) $10,000. 
D) $25,000. 
E) $90,000.

Quizplus · Accepted Answer

The correct amount to evaluate whether to continue investing in the Los Angeles division should be the incremental future revenue or cost savings expected from the investment, not sunk costs or total historical costs.

Use the Following Information to Answer the Following Questions