Calvert Company Has 3 Divisions: A,B,and C Division A's Income

question 134

Multiple Choice

Calvert Company has 3 divisions: A,B,and C Division A's income statement shows the following for the year ended December 31: Cost of goods sold is 80 percent variable and 20 percent fixed.Of the fixed costs,50 percent are avoidable if the division is closed.All of the selling expenses relate to the division and would be eliminated if Division A were eliminated.Of the administrative expenses,85 percent are applied from corporate costs.If Division A were eliminated,Calvert's income would

• A)increase by $100,000.
• B)decrease by $197,500.
• C)decrease by $310,000.
• D)decrease by $422,500.

---

Definitions:

Maturity Date

The specified date on a financial instrument at which the principal (or nominal) amount is due to be paid back in full.

Note Receivable

A note receivable is a written promise to receive a specific amount of money, plus interest if applicable, at a future date, serving as an asset on the balance sheet.

Maturity Date

The specified date on which the final payment of a loan, bond, or other financial instrument is due to be paid.

Note Receivable

A written promise that a customer will pay a fixed amount of money with interest by a certain date.