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Home Q & A Board Other Fields Homework Help Business Accounting
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Science220 Science220
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A year ago
Jerry Mounds, controller for Pearl Distributing, has prepared the following financial information for the most recent period showing profitability the of its three departments:

​Department ADepartment BDepartment C
Sales$52,000$18,000$20,000
Variable expenses 36,000 10,000 14,000
Contribution margin16,0008,0006,000
Fixed expenses:​​​
  Factory rent2,0001,4003,200
  Depreciation2,0006002,600
  Utilities   1,800   1,000   1,200
Total fixed expenses   5,800   3,000   7,000
Operating income$10,200$  5,000($1,000)

The factory rent of $3,200 assigned to Department C is avoidable if the department is eliminated. Depreciation will remain unchanged if a department is dropped. Discontinuing Department C will reduce the utilities by $600.

Required:

Prepare an analysis showing whether Department C should be eliminated.
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Managerial Accounting

Managerial Accounting


Edition: 4th
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munjojmunjoj
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A year ago
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