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:

Profit Center

A profit center is a division or branch within a company that is responsible for generating its own revenue and profit, allowing for performance measurement independently.

Uncontrollable Costs

Uncontrollable costs are expenses that cannot be directly managed or influenced by actions of the business or its managers, often due to external factors.

Investment Center

A division or unit within an organization that is responsible for its own revenue, expenses, and investments, and is evaluated on its profitability.

Profit Center

A profit center is a segment or area of a business that is responsible for generating its own revenues and hence directly contributes to the company's overall profit.