North Division Has the Following Information $$\begin{array} { l r } \text { Sales } & \$ 1,200,000 \\\text { Variable expenses } & 640,000 \\\text { Fixed expenses } & 620,000\end{array}$$

question 69

Multiple Choice

North Division has the following information: $$\begin{array} { l r } \text { Sales } & \$ 1,200,000 \\\text { Variable expenses } & 640,000 \\\text { Fixed expenses } & 620,000\end{array}$$ If this division is eliminated the fixed expenses will be allocated to the company's other divisions.What is the incremental effect on net income if the division is dropped?

• A)$60000 increase
• B)$620000 decrease
• C)$560000 decrease
• D)$580000 increase

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Definitions:

Authorized

Pertains to the maximum number of shares a corporation is legally permitted to issue, as specified in its charter.

Stated Value

An assigned value to no-par value stock by the company for accounting purposes, often used to meet state regulations.

Common Stock

A type of equity security that represents ownership in a corporation, entitling holders to a share of the company's profits and voting rights.

Par Value

The face value of a bond or stock as stated by the issuer.