Freedom Company Has Three Departments Required:
A) Compute the Operating Income for Freedom Company

question 8

Essay

Freedom Company has three departments.Data for the most recent year are presented below:
$\begin{array}{llll}&\text { Dept. } X&\text { Dept. } Y&\text { Dept. } Z\\\text { Sales } & \$ 400 & \$ 200 & \$ 80 \\\text { Variable expenses } & 128 & 52 & 34 \\\text { Unavoidable fixed expenses } & 96 & 52 & 12 \\\text { Avoidable fixed expenses } & 116 & 104 & 54\end{array}$
Required:
A) Compute the operating income for Freedom Company.
B) Compute the contribution margin for each department.
C) Compute the operating income for each department.
D) Which department(s) should be eliminated? Why?

• A) Compute the operating income for Freedom Company.
• B) Compute the contribution margin for each department.
• C) Compute the operating income for each department.
• D) Which department(s) should be eliminated? Why?

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Definitions:

Statue of Freedom

A monument placed atop the United States Capitol dome, symbolizing liberty and democracy, completed in 1863.

Slave States

U.S. states prior to the Civil War where slavery was legally permitted and integral to the economy and society.

Texas Territory

A historical territorial area administered by the United States before Texas became a state in 1845.