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The Operations of Balance Corporation Are Divided into the Kaplan

Question 90

Essay

The operations of Balance Corporation are divided into the Kaplan Division and the Norton Division.Projections for the next year are as follows:
 Kaplan  Division  Norton  Division  Total  Sales $1,200,000$600,000$1,800,000 Variable costs 480,000360,000840,000 Contribution margin $720,000$240,000$960,000 Direct fixed costs 160,00090,000250,000 Segment margin $560,000$150,000$710,000 Allocated common  costs 360,000180,000540,000 Operating income  (loss) $200,000$30,000)$170,000\begin{array} { | l | r | r | r | } \hline & \begin{array} { r } \text { Kaplan } \\\text { Division }\end{array} & \begin{array} { r } \text { Norton } \\\text { Division }\end{array} & \text { Total } \\\hline \text { Sales } & \$ 1,200,000 & \$ 600,000 & \$ 1,800,000 \\\hline \text { Variable costs } & 480,000 & 360,000 & 840,000 \\\hline \text { Contribution margin } & \$ 720,000 & \$ 240,000 & \$ 960,000 \\\hline \text { Direct fixed costs } & 160,000 & 90,000 & 250,000 \\\hline \text { Segment margin } & \$ 560,000 & \$ 150,000 & \$ 710,000 \\\hline \begin{array} { l } \text { Allocated common } \\\text { costs }\end{array} & 360,000 & 180,000 & 540,000 \\\hline \begin{array} { l } \text { Operating income } \\\text { (loss) }\end{array} & \$ 200,000 & \$ 30,000 ) & \$ 170,000 \\\hline\end{array}

Required:
a.Operating income for Balance Corporation as a whole if the Norton Division were dropped would be
b.If the Norton Division were dropped,Kaplan Division's sales would increase by 45%.If this happened,the operating income for Balance Corporation as a whole would be:

Correct Answer:

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a.$560,000 - 540,000...

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