Azuki Corporation Operates in Two Sales Territories, Urban and Rural

question 223

Multiple Choice

Azuki Corporation operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below:
Azuki's common fixed expenses were $25,000 last year.
-If operations in the Rural Sales Territory would have been discontinued at the beginning of last year,how would this have changed the net operating income of Azuki Corporation as a whole?

• A) $5,000 increase
• B) $6,000 increase
• C) $11,000 increase
• D) $24,000 decrease

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Definitions:

Master Budget

A comprehensive financial planning document that consolidates all of a company's individual budgets, including sales, production, and cash budgets.

Credit Sales

Sales transactions where the payment is deferred to a future date, allowing customers to purchase goods or services on credit.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

Cash Budget

A budget that estimates cash inflows and outflows over a specific period of time, aiding in managing the company's cash balance.