Question

Cliff Corporation is considering eliminating a department that has annual sales of $86,000, variable costs of...

Cliff Corporation is considering eliminating a department that has annual sales of $86,000, variable costs of $40,000, and annual fixed costs of $60,000. Of the fixed costs, $10,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be _______.

Multiple Choice

  • ($36,000)

  • $4,000

  • ($4,000)

  • $36,000

Homework Answers

Answer #1
Answer
The correct option is B : $ 4000
Explanation
Department Before Eliminating Department After Eliminating Advantage
Contribution Margin $                46,000
Fixed Overhead $                60,000 $          10,000
Net Loss -$               14,000 -$         10,000 $            4,000
Contribution Margin =86000-60000= $ 46000
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Cliff Corporation is considering eliminating a department that has annual sales of $86,000, variable costs of...
Cliff Corporation is considering eliminating a department that has annual sales of $86,000, variable costs of $40,000, and annual fixed costs of $60,000. Of the fixed costs, $10,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be _______. Multiple Choice ($36,000) $4,000 ($4,000) $36,000
Question 25 Fabri Corporation is considering eliminating a department that has an annual contribution margin of...
Question 25 Fabri Corporation is considering eliminating a department that has an annual contribution margin of $33,000 and $66,000 in annual fixed costs. Of the fixed costs, $16,500 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be: A. ($33000) B. $33000 C. ($16500) D. $16500
25. Fabri Corporation is considering eliminating a department that has an annual contribution margin of $33,000...
25. Fabri Corporation is considering eliminating a department that has an annual contribution margin of $33,000 and $66,000 in annual fixed costs. Of the fixed costs, $16,500 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be: 27. The SP Corporation makes 34,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $ 9.30 Direct labor $ 8.30...
Shoe is thinking about eliminating a division. The division’s annual contribution margin is $160,000. The division...
Shoe is thinking about eliminating a division. The division’s annual contribution margin is $160,000. The division has $320,000 in annual fixed costs, $180,000 of which cannot be avoided. The annual financial advantage (disadvantage) for Shoe to eliminate this division would be: $160,000 ($160,000) ($20,000) $20,000
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for...
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for the upcoming year appear below: Sales $ 960,000 Variable expenses $ 381,000 Fixed manufacturing expenses $ 363,000 Fixed selling and administrative expenses $ 243,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $219,000 of the fixed manufacturing expenses and $180,000 of the fixed selling and administrative expenses are avoidable if product...
The SP Corporation makes 40,000 motors to be used in the production of its sewing machines....
The SP Corporation makes 40,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $ 9.90 Direct labor $ 8.90 Variable manufacturing overhead $ 3.65 Fixed manufacturing overhead $ 4.60 An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $25.15. If SP Corporation decides not to make...
The management of a company is considering dropping a product line. Data from the company’s budget...
The management of a company is considering dropping a product line. Data from the company’s budget for the upcoming year for this product line appear below: Sales Revenue: $950,000 Variable costs: $388,000 Fixed manufacturing costs: $370,000 Fixed selling and administrative costs: $250,000 Further investigation has revealed that $254,776 of the fixed manufacturing costs and $193,122 of the fixed selling and administrative expenses are avoidable if the product were discontinued. What is the total annual financial advantage (disadvantage) for the company...
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for...
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for the upcoming year appear below: Sales $ 960,000 Variable expenses $ 392,000 Fixed manufacturing expenses $ 374,000 Fixed selling and administrative expenses $ 254,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $241,000 of the fixed manufacturing expenses and $202,000 of the fixed selling and administrative expenses are avoidable if product...
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for...
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for the upcoming year appear below: Sales $ 970,000 Variable expenses $ 382,000 Fixed manufacturing expenses $ 364,000 Fixed selling and administrative expenses $ 244,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $221,000 of the fixed manufacturing expenses and $182,000 of the fixed selling and administrative expenses are avoidable if product...
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for...
The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for the upcoming year appear below: Sales $ 950,000 Variable expenses $ 380,000 Fixed manufacturing expenses $ 362,000 Fixed selling and administrative expenses $ 242,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $217,000 of the fixed manufacturing expenses and $178,000 of the fixed selling and administrative expenses are avoidable if product...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT