The Following Information Was Taken from the Segmented Income Statement

question 66

Multiple Choice

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: $\begin{array}{cccc} && \text { Los } & \text { Bay } & \text { Central } \\&\text { Restin, } & \text { Angeles } & \text { Area } & \text { Valley } \\&\text { Inc. } & \text { Division } & \text { Division } & \text { Division }\\\hline\text { Revenues } & \$ 750,000 & \$ 200,000 & \$ 235,000 & \$ 325,000 \\\text { Variable operating expenses } & 410,000 & 110,000 & 120,000 & 180,000 \\\text { Controllable fixed expenses } & 210,000 & 65,000 & 75,000 & 70,000 \\\text { Noncontrollable fixed expenses } & 60,000 & 15,000 & 20,000 & 25,000\end{array}$ In addition, the company incurred common fixed costs of $18,000.
Which of the following amounts should be used to evaluate whether Restin, Inc., should continue to invest company resources in the Los Angeles division?

• A) $4,000.
• B) $8,000.
• C) $10,000.
• D) $25,000.
• E) $90,000.

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in manufacturing a product or delivering a service.

Fixed Manufacturing Overhead

refers to the manufacturing costs that do not vary with the volume of production, such as rent and salaries.

Job-Order Costing System

An accounting method used to allocate costs to specific jobs or orders, typically used in situations where products or services are distinct and made to order.

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate manufacturing overhead costs to products or job orders, calculated before the period begins based on expected costs and activity levels.