[The Following Information Applies to the Questions Displayed Below

question 16

Multiple Choice

[The following information applies to the questions displayed below.]
Dalton Co.follows a policy of allocating all common costs equally among its profit centers.A partial responsibility income statement for a typical month is shown below:
After evaluating these data,Dalton Co.decides to close Profit Center 3.This action eliminates all revenue,variable costs,and fixed costs traceable to Center 3,but eliminates only $35,000 in common fixed costs.Closing Profit Center 3 has no effect upon the responsibility margins of Centers 1 and 2.
-Closing Profit Center 3 should cause Dalton's monthly operating income to:

• A)Increase by $5,000.
• B)Decrease by $15,000.
• C)Decrease by $7,000.
• D)Decrease by $20,000.

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Definitions:

Bilateral Tolerance

A type of tolerance that allows a dimension to vary equally in both positive and negative directions from the nominal value.

Plus

A mathematical symbol (+) used to indicate addition or a positive value.

Minus

In engineering and mathematics, "minus" indicates a subtraction operation or a negative value in measurements and tolerances.

Abbreviation

The act of shortening something by omitting letters or using initials.