Kentucky Distributors has two divisions - Northern and Southern.The divisions have provided the following financial information:
$\begin{array}{lrr}
& \underline{\textbf { Northern }} & \underline{\textbf { Southern }} \
\text { Sales } & \$ 150,000 & \$ 210,000 \
\text { Variable costs } & 95,000 & 110,000 \
\text { Common fixed costs } & \underline{65,000} & \underline{75,000} \
\text { Operating income } & \underline{\underline{\$ 10,000}} & \underline{\underline{\$ 25,000}}
\end{array}$ Kentucky's executives are considering the elimination of the Northern division.If the division is eliminated,the common fixed costs will remain unchanged.Given these data,should the Northern division be eliminated? Why?

Question

Kentucky Distributors has two divisions - Northern and Southern.The divisions have provided the following financial information:
 $\begin{array}{lrr} 
& \underline{\textbf { Northern }} & \underline{\textbf { Southern }} \
\text { Sales } & \$ 150,000 & \$ 210,000 \
\text { Variable costs } & 95,000 & 110,000 \
\text { Common fixed costs } & \underline{65,000} & \underline{75,000} \
\text { Operating income } & \underline{\underline{\$ 10,000}} & \underline{\underline{\$ 25,000}}
\end{array}$ Kentucky's executives are considering the elimination of the Northern division.If the division is eliminated,the common fixed costs will remain unchanged.Given these data,should the Northern division be eliminated? Why?

Quizplus · Accepted Answer

The Answer of Kentucky Distributors has two divisions - Northern and Southern.The divisions have provided the following financial information:
 $\begin{array}{lrr} 
& \underline{\textbf { Northern }} & \underline{\textbf { Southern }} \
\text { Sales } & \$ 150,000 & \$ 210,000 \
\text { Variable costs } & 95,000 & 110,000 \
\text { Common fixed costs } & \underline{65,000} & \underline{75,000} \
\text { Operating income } & \underline{\underline{\$ 10,000}} & \underline{\underline{\$ 25,000}}
\end{array}$ Kentucky's executives are considering the elimination of the Northern division.If the division is eliminated,the common fixed costs will remain unchanged.Given these data,should the Northern division be eliminated? Why?

Kentucky Distributors Has Two Divisions - Northern and Southern Kentucky's Executives Are Considering the Elimination of the Northern Division