The Operations of Jorge Corporation Are Divided into the Northern

question 137

Essay

The operations of Jorge Corporation are divided into the Northern Division and the Eastern Division.Projections for the next year are as follows:
$$\begin{array} { | l | r | r | r | } \hline & \begin{array} { r } \text { Northem } \\\text { Division }\end{array} & \begin{array} { r } \text { Eastem } \\\text { Division }\end{array} & \text { Total } \\\hline \text { Sales } & \$ 750,000 & \$ 540,000 & \$ 1,290,000 \\\hline \text { Less: Variable costs } & 270,000 & 300,000 & 570,000 \\\hline \text { Contribution margin } & \$ 480,000 & \$ 240,000 & \$ 720,000 \\\hline \text { Less: Direct fixed costs } & 225,000 & 190,000 & 415,000 \\\hline \text { Segment margin } & \$ 255,000 & \$ 50,000 & \$ 305,000 \\\hline \begin{array} { l } \text { Less: Allocated common } \\\text { costs }\end{array} & 130,000 & 95,000 & 225,000 \\\hline \text { Operating inc ome (loss) } & \$ 125,000 & \$ 45,000 ) & \$ 80,000 \\\hline\end{array}$$

Required:
a.Operating income for Jorge Corporation,as a whole,if the Eastern Division were dropped would be:
b.If Eastern Division is dropped,Northern's sales will increase by 20%.What will Jorge Corporation's operating income be?

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Definitions:

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A material composed of two or more elements that are chemically bonded together in precise ratios.