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Are these two divisions equally unprofitable

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Reference no: EM133042573

Question - The following partial income statements are for the Southeast and Northwest Divisions of US Games. These two divisions operate in the same industry but in different geographical markets.

 

Southeast

Northwest

Sales

$3,000,000

$3,000,000

Variable CGS

(2,400,000)

(1,000,000)

Variable selling costs

(250,000)

(250,000)

Avoidable direct fixed costs

(400,000)

(900,000)

Unavoidable direct fixed costs

(100,000)

(1,000,000)

Allocated fixed costs

(300,000)

(300,000)

Operating income

$(450,000)

$(450,000)

Required - Are these two divisions equally unprofitable? Why or why not?

Reference no: EM133042573

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