Olson Company has three departments.Data for the most recent year is presented below:
Olson Company is considering eliminating Dept.C because it is operating at a loss.
Required:
A)Compute the change in operating income if Olson Company eliminates Dept.C and does not replace it.
B)Compute the change in operating income if Olson Company eliminates Dept.C and doubles the sales of Dept.T without increasing fixed costs.

Question

Olson Company has three departments.Data for the most recent year is presented below:
  Olson Company is considering eliminating Dept.C because it is operating at a loss.
Required: 
A)Compute the change in operating income if Olson Company eliminates Dept.C and does not replace it. 
B)Compute the change in operating income if Olson Company eliminates Dept.C and doubles the sales of Dept.T without increasing fixed costs.

Quizplus · Accepted Answer

The Answer of Olson Company has three departments.Data for the most recent year is presented below:
  Olson Company is considering eliminating Dept.C because it is operating at a loss.
Required: 
A)Compute the change in operating income if Olson Company eliminates Dept.C and does not replace it. 
B)Compute the change in operating income if Olson Company eliminates Dept.C and doubles the sales of Dept.T without increasing fixed costs.

Olson Company Has Three Departments