The Dropinsky Company's management wants to determine if Division Y should be eliminated. The following data are available (in thousands).

a. Assuming all direct fixed costs of Division Y are avoidable, what would be the change in operating income if Division Y were eliminated?
b. Assuming one-half of the direct fixed costs of Division Y are avoidable, what would be the change in operating income if Division Y were eliminated?

Question

The Dropinsky Company's management wants to determine if Division Y should be eliminated. The following data are available (in thousands).
  
a. Assuming all direct fixed costs of Division Y are avoidable, what would be the change in operating income if Division Y were eliminated?
b. Assuming one-half of the direct fixed costs of Division Y are avoidable, what would be the change in operating income if Division Y were eliminated?

Quizplus · Accepted Answer

The Answer of The Dropinsky Company's management wants to determine if Division Y should be eliminated. The following data are available (in thousands).
  
a. Assuming all direct fixed costs of Division Y are avoidable, what would be the change in operating income if Division Y were eliminated?
b. Assuming one-half of the direct fixed costs of Division Y are avoidable, what would be the change in operating income if Division Y were eliminated?

The Dropinsky Company's Management Wants to Determine If Division Y