The Dropinsky Company's Management Wants to Determine If Segment B

question 74

Essay

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?

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Definitions:

Water

Water is a transparent, tasteless, odorless, and nearly colorless chemical substance that is the main constituent of Earth's streams, lakes, and oceans, and the fluids of most living organisms.

Level of Formality

The degree to which language, attire, or behavior is formal or informal, often context-dependent.

Evening Wear

Clothing designed to be worn for formal events and social functions held in the evening.

Designer Clothing

Apparel created by a well-known fashion designer, often characterized by high quality, exclusivity, and high price.