After the closing of Profit Center 3,the monthly income from operations for Profit Center 1,as measured by Dalton Co.should be approximately:
A)$25,000.
B)$17,500.
C)$10,000.
D)$15,000.

Question

Quizplus · Accepted Answer

Since Profit Center 3 is being closed, its contribution to the overall monthly income from operations will be eliminated. Therefore, we need to subtract the monthly income from operations of Profit Center 3 from the total monthly income from operations to determine the new monthly income from operations for Profit Center 1. From the table, we can see that Profit Center 3 contributes $5,000 per month to the overall monthly income from operations. Thus, the new monthly income from operations for Profit Center 1 will be $20,000 ($25,000 total monthly income from operations - $5,000 monthly income from operations for Profit Center 3). Therefore, the best choice is D, $15,000.

After the Closing of Profit Center 3,the Monthly Income from Operations