Diva Footwear Is Contemplating If It Should Continue Producing Platform

question 20

Multiple Choice

Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the company's segments $\begin{array}{lrrr}&\text { Platform Shoes}&\text { Athletic Shoes}&\text { Boots }\\\hline\text { Sales } & \$ 120,000 & \$ 420,000 & \$ 360,000 \\\text { Variable costs } & 64,000 & 220,000 & 140,000\\\text { Contribution margin } & 56,000 & 200,000 & 220,000 \\\text { Direct fixed costs } & 45,000 & 70,000 & 90,000 \\\text { Allocated fixed costs } & 20,000 & 70,000 & 60,000\\\text { Net income }&(\$9,000) &\$60,000&\$70,000\end{array}$ Based on the information provided, which of the following is most likely to be the basis of allocating the fixed costs to the segments?

• A) Sales
• B) Direct fixed costs
• C) Net income
• D) Variable costs

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Definitions:

Metabolized

The process of breaking down substances within the body to produce energy, or the conversion of substances into other forms within the body.

Thyroid Follicle

The basic structural unit of the thyroid gland, consisting of a spherical grouping of thyroid cells surrounding a cavity filled with colloid.

Parafollicular Cells

Specialized cells in the thyroid gland that produce calcitonin, a hormone involved in regulating calcium levels in the blood.

Isthmus

A narrow strip of land connecting two larger land areas or a constricted part of an organ connecting two larger parts.