Selzone Corporation Operates Two Divisions with the Following Operating Results

question 77

Multiple Choice

Selzone Corporation operates two divisions with the following operating results from last year: $\begin{array}{|l|c|c|c|}\hline &\text { Northern Division } & \text { Southern Division } & \text { Total } \\\hline \text { Sales } & \$ 600,000 & \$ 300,000 & \$ 900,000 \\\hline \text { Variable costs } & \$ 310,000 & \$ 200,000 & \$ 510,000 \\\hline \text { Contribution margin } & \$ 290,000 & \$ 100,000 & \$ 390,000 \\\hline \text { Avoidable fixed costs } & \$ 110,000 & \$ 70,000 & \$ 180,000 \\\hline \text { Allocated common fixed costs } & \$ 90,000 & \$ 45,000 & \$ 135,000 \\\hline \text { Operating income (loss) } & \$ 90,000 & \begin{array}{l}\$ \\(15,000) \end{array} & \$ 75,000 \\\hline\end{array}$ Management is considering whether the Southern Division should be dropped since it incurred an operating loss last year.Allocated common fixed costs would continue for Selzone Corporation whether the division is dropped or not.
If the Southern Division had been dropped at the beginning of last year,what would the total operating income for Selzone Corporation have been for the year?

• A)$15,000
• B)$30,000
• C)$45,000
• D)$90,000

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