A Portion of the Divisional Income Statement for the Year

question 95

Essay

A portion of the divisional income statement for the year just ended is presented below in a condensed form.
$\begin{array}{ll}\text { Department F }\\\$ 93,800 & \text { Net sales } \\ \underline{72,400 }& \text { Cost of goods sold } \\\$ 21,400 & \text { Grossprofit } \\ \underline{ 28,900} & \text { Operating expenses } \\ \underline{\$(7,500)} & \text { Loss from operations }\end{array}$ The operating expenses of Department F include $16,000 for direct expenses.
It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business. Assuming the accuracy of these estimates, determine the effect (increase or decrease and the amount) on the income from operations of the business if Department F had been discontinued.

Understand the connection between isocost lines, input prices, and total cost.

Learn about isoquants and how movement across isoquants reflects changes in production output and input usage.

Understand the terminology and concepts related to memory errors.

Recognize the principles and theories of memory, including decay, encoding specificity, and depth of processing.

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Definitions:

Controllable Costs

Costs that can be influenced or managed by decisions made by managers within the organization.

Cost Performance

Evaluates how effectively a project or a company manages its actual cost in comparison to its budgeted or planned cost.

Contribution Percentages

The portion of sales revenue that is not consumed by variable costs, indicating how much contributes to covering fixed costs and generating profits.

Departmental Contributions

The specific financial or operational impact of individual departments within a company toward its overall success.