Power IncHas Two Divisions,Windsor and Ridge

question 135

Multiple Choice

Power Inc.has two divisions,Windsor and Ridge.Following is the income statement for the past month: What would Power's profit margin be if the Windsor division was dropped and all fixed costs are unavoidable?

• A)$0
• B)$80,000 loss
• C)$42,000 profit
• D)$80,000 profit

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Definitions:

Optimal Amount of Credit

The ideal volume of credit a business can extend to customers that maximizes net profitability while minimizing credit risk.

Total Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Total Carrying Costs

The comprehensive costs associated with holding inventory, including storage, handling, insurance, and taxes.

Credit Score

A numerical expression based on a level analysis of a person's credit files, representing the creditworthiness of an individual.