Summers Corporation Is Composed of Five Divisions

question 73

Multiple Choice

Summers Corporation is composed of five divisions.Each division is allocated a share of Summers'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 Summers'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 thesE.

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Definitions:

Negligent Misstatement

Providing false information carelessly or without reasonable grounds, causing someone else to suffer damage or loss.

Legal Liability

The legal responsibility to compensate for harm caused to another person or property, arising out of one's actions or failures to act.

Negligent Conduct

Behavior that falls below the standard of care expected to protect others from unreasonable risk of harm.

Illegal Contract

A contract that is not enforceable because it involves activities that are against the law.