Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses. Division X
What would be the effect on the firm's operating income if Division X were discontinued?
A) increase $10,000
B) decrease $40,000
C) decrease $100,000
D) decrease $10,000

Question

Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses. Division X
 What would be the effect on the firm's operating income if Division X were discontinued?
A) increase $10,000 
B) decrease $40,000 
C) decrease $100,000 
D) decrease $10,000

Quizplus · Accepted Answer

The Answer of Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses. Division X
 What would be the effect on the firm's operating income if Division X were discontinued?
A) increase $10,000 
B) decrease $40,000 
C) decrease $100,000 
D) decrease $10,000

Consider the Following Portion of a Segmented Income Statement for the Year