The Operations of Smits Corporation Are Divided into the Childs

question 12

Multiple Choice

The operations of Smits Corporation are divided into the Childs Division and the Jackson Division.Projections for the next year are as follows: $\begin{array}{lccc}&\text { Childs } & \text { Jackson } & \\&\text { Division } & \text { Division } & \text { Total }\\ \text { Sales } & \$ 250,000 & \$ 180,000&\$430,000 \\ \text { Variable costs } & 90,000 & 100,000 &190,000\\ \text { Contribution margin } & \$ 160,000 & \$ 80,000&\$240,000 \\ \text { Direct fixed costs } & 75,000 & 62,500&137,500 \\ \text { Segment margin } & \$ 85,000 & \$ 17,500 &\$102,500\\\text { Allocated common costs } & 35,000 & 27,500&62,500 \\\text { perating income (loss) } & \overline{\$ 50,000} & \$(10,000) &\$40,000 \\\end{array}$ What would be the operating income for Smits Corporation as a whole if the Jackson Division were dropped?

• A)$22,500
• B)$40,000
• C)$50,000
• D)$60,000

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Definitions:

Manager

A person in charge of managing or overseeing either a portion or the entirety of a business or comparable entity.

Ratio

A mathematical relationship that compares two numbers or quantities, indicating how much of one value exists per unit of the other.

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