The Following Information Relates to Next Year's Projected Operating Results

question 236

Multiple Choice

The following information relates to next year's projected operating results of the Children's Division of Grunge Clothing Corporation: If the Children's Division is eliminated, $170,000 of the above fixed expenses could be avoided. The annual financial advantage (disadvantage) for the company of eliminating this division should be:

• A) ($300,000)
• B) $30,000
• C) ($30,000)
• D) $300,000

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Definitions:

U.S. Treasury Department

The federal department responsible for managing government revenue, producing money, and formulating fiscal policy in the United States.

Outstanding Shares

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares.

Issued Shares

Shares of a company that have been allocated and are currently held by shareholders.

Common Stock

Shares representing ownership in a company, giving holders voting rights and a share in the company's profits via dividends.