A Segment Has the Following Data: What Will Be

question 56

Multiple Choice

A segment has the following data: What will be the incremental effect on net income if this segment is eliminated, assuming the fixed costs will be allocated to profitable segments?

• A)$15,000 increase
• B)$155,000 decrease
• C)$140,000 decrease
• D)$145,000 decrease

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Definitions:

Payback

The period of time it takes for an investment to generate an amount of money equal to the initial cost of the investment.

Time Value

The belief that money available now is worth more than an identical amount in the future because of its potential earning power.

Relevant Cash Flows

Cash flows that will only occur as a result of undertaking a project or investment.

Financial Perspective

An viewpoint emphasizing the importance of managing a company's financial resources wisely to ensure its long-term success and stability.