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A Company Expects Its Three Departments to Yield the Following

Question 82

Multiple Choice

A company expects its three departments to yield the following income for next year:
 Dept. Q  Dept. R  Dept. S  Sales $6,000$7,000$8,000 Expenses  Avoidable 2,0003,0004,000 Unavoidable 1,5002,5004,500 Total expenses 3,5005,5008,500 Net income(loss)  $2,500$1,500$(500) \begin{array}{lrrr} & \text { Dept. Q } & \text { Dept. R } & \text { Dept. S } \\\text { Sales } & \$ 6,000 & \$ 7,000 & \$ 8,000\\ \text { Expenses }\\\text { Avoidable } & 2,000 & 3,000 & 4,000 \\\text { Unavoidable } & 1,500 & 2,500 & 4,500 \\ \text { Total expenses } & 3,500 & 5,500 & 8,500 \\ \text { Net income(loss) } & \$ 2,500 & \$ 1,500 & \$(500) \end{array}
Compute the change to the company's total net income if Dept.S is eliminated.


A) $500 increase
B) $500 decrease
C) $4,000 increase
D) $4,000 decrease
E) $3,500 decrease

Correct Answer:

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