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Cabells, Inc. has two divisions Electronics and Appliances. The divisions have provided the ...

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Cabells, Inc. has two divisions Electronics and Appliances. The divisions have provided the ...

Cabells, Inc. has two divisions — Electronics and Appliances. The divisions have provided the following financial information:

Electronics

Appliances

Sales	$310,000	$410,000
Variable costs	225,000	270,000
Avoidable fixed costs	92,000	60,000
Common fixed costs	35,000	35,000
Operating income	($ 42,000)	$ 45,000

Cabells' executives are considering the elimination of the Electronics division. If the division is eliminated, the common fixed costs will remain unchanged. Given these data, should the Electronics division be eliminated? Why?

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Managerial Accounting

Edition: 4^th

Author: Davis

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