Halliburton Division Has the Following Data $$\begin{array} { l r } \text { Sales } & \$ 500,000 \\\text { Variable expenses } & 240,000 \\\text { Fixed expenses } & 280,000\end{array}$$

question 101

Multiple Choice

Halliburton Division has the following data: $$\begin{array} { l r } \text { Sales } & \$ 500,000 \\\text { Variable expenses } & 240,000 \\\text { Fixed expenses } & 280,000\end{array}$$ The fixed costs are not avoidable and must be allocated to profitable divisions if the segment is eliminated.What will be the incremental effect on net income if Halliburton Division is eliminated?

• A)$60,000 increase
• B)$260,000 decrease
• C)$280,000 decrease
• D)Cannot be determined from the data provided.

---

Definitions:

Intragroup Sale

Transactions of goods or services between companies within the same group, which may require elimination adjustments during consolidation.

Dividend Payable

A liability recorded on a company's balance sheet for dividends that have been declared but not yet paid to shareholders.

Dividend Receivable

The amount due to shareholders from declared dividends by the company in which they hold shares, recognized as an asset on the balance sheet until paid.

Elimination

The process of removing intercompany transactions when consolidating financial statements of a group.