Carlton Corporation Is Composed of Five Divisions

question 63

Multiple Choice

Carlton Corporation is composed of five divisions. Each division is allocated a share of Carlton's overhead to make divisional managers aware of the cost of running the corporate headquarters. The following information relates to the Metro Division:

If the Metro Division is closed, 100% of the traceable fixed operating costs can be eliminated. What will be the impact on Carlton's overall profitability if the Metro Division is closed?

• A) Decrease by $200,000.
• B) Decrease by $500,000.
• C) Decrease by $2,100,000.
• D) Decrease by $2,400,000.
• E) None of the answers is correct.

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Definitions:

Formal Democracy

A system of government where official, structured, and institutionalized procedures are followed to elect representatives and make policy decisions.

Socialist Democracy

A political system that combines socialist economic principles with democratic governance, aiming for collective ownership and egalitarian distribution of resources within a democratic framework.

Global Spread

The widespread distribution or dissemination of phenomena, products, cultures, diseases, etc., across different countries and continents.

Democracy

A system of government in which power is vested in the people, who rule either directly or through freely elected representatives.