O'Neill,Incorporated's segmented income statement for the most recent month is given below. For each of the following questions,refer back to the above original data. A proposal has been made that will lower variable expenses in Store A to 62% of sales.However,this reduction can only be accomplished by an increase in Store A's traceable fixed expenses of $8,000.If this proposal is implemented and sales remain constant,overall company net operating income should:
A)remain the same
B)decrease by $4,200
C)increase by $2,000
D)increase by $8,000

Question

O'Neill,Incorporated's segmented income statement for the most recent month is given below.  For each of the following questions,refer back to the above original data. A proposal has been made that will lower variable expenses in Store A to 62% of sales.However,this reduction can only be accomplished by an increase in Store A's traceable fixed expenses of $8,000.If this proposal is implemented and sales remain constant,overall company net operating income should:
A)remain the same 
B)decrease by $4,200 
C)increase by $2,000 
D)increase by $8,000

Quizplus · Accepted Answer

New Store A variable expenses = 0.62 × $100,000 = $62,000
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O'Neill,Incorporated's Segmented Income Statement for the Most Recent Month Is