A Segment Has the Following Data $$\begin{array} { l r } \text { Sales } & \$ 350,000 \\\text { Variable expenses } & 150,000 \\\text { Fixed expenses } & 285,000\end{array}$$

question 43

Multiple Choice

A segment has the following data: $$\begin{array} { l r } \text { Sales } & \$ 350,000 \\\text { Variable expenses } & 150,000 \\\text { Fixed expenses } & 285,000\end{array}$$ What will be the incremental effect on net income if this segment is eliminated assuming the fixed expenses will be allocated to profitable segments?

• A) $200000 increase
• B) $200000 decrease
• C) $275000 decrease
• D) Cannot be determined from the data provided.

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Definitions:

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, or loan payments.

Fixed Costs

Costs that do not vary with the level of output or production, such as rent, salaries, and loan payments.

Variable Costs

Costs that vary directly with the level of production or output.

Yearly Return

The percentage of increase or decrease in the value of an investment over a one-year period.