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:

Sarc

A root word used in medical terms to indicate flesh or connective tissue.

Flesh

The soft substance consisting of muscle and fat between the skin and bones of an animal or a human.

Tumor

A growth of cells that occurs abnormally when cell division exceeds normal limits or when cells fail to die at the appropriate time.

Cancer

A broad group of diseases characterized by the uncontrolled growth and spread of abnormal cells in the body.