The King Company Has Two Divisions-North and South Management at King Is Pondering the Elimination of North Division

question 70

Multiple Choice

The King Company has two divisions-North and South. The divisions have the following revenues and expenses:
$\begin{array}{lrr}&\text {North}&\text {South}\\ \text { Sales } & \$ 900,000 & \$ 800,000 \\\text { Variable expenses } & 450,000 & 300,000 \\\text { Traceable fixed expenses } & 260,000 & 210,000 \\\text { Allocated common corporate expenses } & 240,000 & 190,000\\\text { Net operating income (loss) }&\$(50,000) &\$100,000\end{array}$
Management at King is pondering the elimination of North Division. If North Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected. Given these data, the elimination of North Division would result in an overall company net operating income of:

• A) $100,000.
• B) $150,000.
• C) $(140,000).
• D) $50,000.

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