Gion Company Is Considering Eliminating Its Windows Division,which Reported an Operating

question 13

Multiple Choice

Gion Company is considering eliminating its windows division,which reported an operating loss for the recent year of $105,000.Division sales for the year were $1,110,000 and its variable costs were $975,000.The fixed costs of the division were $220,000.If the windows division is dropped,65% of the fixed costs allocated to it could be eliminated.The impact on Gion's operating income from eliminating this business segment would be:

• A)$7,200 decrease
• B)$8,000 increase
• C)$143,000 decrease
• D)$143,000 increase
• E)$8,000 decrease

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Definitions:

Quasi Contract

An obligation imposed by law to prevent unjust enrichment, even though no actual contract exists between the parties involved.

Specific Performance

A legal remedy requiring a party to perform a specific act, often the fulfillment of contractual obligations, as opposed to paying damages.

Gross Negligence

An extreme lack of care that demonstrates a willful or reckless disregard for the safety or lives of others, significantly beyond ordinary negligence.

Willful Misconduct

Intentional wrongdoing or reckless disregard for the safety and rights of others.