The Dropinsky Company's management wants to determine if Segment B should be eliminated.The following data are available (in thousands).
a.Assuming all direct fixed costs of Segment B are avoidable,what would be the change in operating income if Segment B were eliminated?
b.Assuming one-half of the direct fixed costs of Segment B are avoidable,what would be the change in operating income if Segment B were eliminated?
Definitions:
Least-Squares Regression
A statistical method to determine a line of best fit by minimizing the sum of squares of the distances of data points from the proposed line.
Sum Of Squares
A statistical measure that quantifies the variation or dispersion of a set of data points, by calculating the sum of the squared differences from the mean.
Best-Fitting Line
A line through a scatter plot of data points that best expresses the relationship between those points.
Observed Errors
The discrepancies between measured values and their true, expected, or theoretical values.
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