Kim Company's western territory's forecasted income statement for the upcoming year is as follows:
$$\begin{array} { | l | l | }
\hline \text { Sales } & \$ 850,000 \
\hline \text { Variable expenses } & ( 520,000 ) \
\hline \text { Contribution margin } & \$ 330,000 \
\hline \text { Fixed expenses } & ( 500,000 ) \
\hline \text { Operating loss } & ( \$ 170,000 ) \
\hline
\end{array}$$
Kim Company's management is considering dropping the western territory and has determined that $310,000 of the fixed expenses is avoidable.What is the change in Kim Company's forecasted operating profit or loss for the upcoming year if the western territory is dropped? Assume the company predicts an operating loss across the entire company.

Question

Kim Company's western territory's forecasted income statement for the upcoming year is as follows:
$$\begin{array} { | l | l | } 
\hline \text { Sales } & \$ 850,000 \
\hline \text { Variable expenses } & ( 520,000 ) \
\hline \text { Contribution margin } & \$ 330,000 \
\hline \text { Fixed expenses } & ( 500,000 ) \
\hline \text { Operating loss } & ( \$ 170,000 ) \
\hline
\end{array}$$
Kim Company's management is considering dropping the western territory and has determined that $310,000 of the fixed expenses is avoidable.What is the change in Kim Company's forecasted operating profit or loss for the upcoming year if the western territory is dropped? Assume the company predicts an operating loss across the entire company.

Quizplus · Accepted Answer

The Answer of Kim Company's western territory's forecasted income statement for the upcoming year is as follows:
$$\begin{array} { | l | l | } 
\hline \text { Sales } & \$ 850,000 \
\hline \text { Variable expenses } & ( 520,000 ) \
\hline \text { Contribution margin } & \$ 330,000 \
\hline \text { Fixed expenses } & ( 500,000 ) \
\hline \text { Operating loss } & ( \$ 170,000 ) \
\hline
\end{array}$$
Kim Company's management is considering dropping the western territory and has determined that $310,000 of the fixed expenses is avoidable.What is the change in Kim Company's forecasted operating profit or loss for the upcoming year if the western territory is dropped? Assume the company predicts an operating loss across the entire company.

Kim Company's Western Territory's Forecasted Income Statement for the Upcoming