Calculate the increase or decrease in operating income

Assignment Help Accounting Basics
Reference no: EM131665602

Question: Closing down divisions. Ainsley Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2017 follows:

727_32.png

Further analysis of costs reveals the following percentages of variable costs in each division: Cost of goods sold 90% 80% 90% 85% Selling, general, and administrative expenses 50% 50% 60% 60% Closing down any division would result in savings of 40% of the fixed costs of that division. Top management is very concerned about the unprofitable divisions (A and B) and is considering closing them for the year.

1. Calculate the increase or decrease in operating income if Ainsley closes division A.

2. Calculate the increase or decrease in operating income if Ainsley closes division B.

3. What other factors should the top management of Ainsley consider before making a decision?

Reference no: EM131665602

Questions Cloud

Equilibrium price and quantity of the market : State in words and show with a graph the effect of the following events on equilibrium price and quantity of the market given.
Define western worldview and the postmodern worldview : Western worldview and the postmodern worldview. Which parts, if any, do you identify with
What led to the collapse of enron under lay and skilling : Enron: What Caused the Ethical Collapse? What led to the collapse of Enron under Lay and Skilling? How did Enron's corporate culture promote unethical decisions
Set the laspeyres price index : Set the Laspeyres price index in year 1 equal to 100. Then the Laspeyres price index in year 2 is________.
Calculate the increase or decrease in operating income : Cost of goods sold 90% 80% 90% 85% Selling, general, and administrative expenses 50% 50% 60% 60% Closing down any division would result in savings of 40%.
What is your philosophy regarding euthanasia : What is your philosophy regarding euthanasia? Is there ever a time when it is the "right thing to do?" How does this position align with a biblical worldview?
Define the health care environment prior : How was this issue addressed in the health care environment prior to the implementation of the ACA. How will this issue be addressed by the Patient Protection
Important to public health practice in alaska : Briefly describe 'the immigrant paradox' and why it might be important to public health practice in Alaska.
Discuss environment prior to the implementation of the aca : How was this issue addressed in the health care environment prior to the implementation of the ACA and How will this issue be addressed by Patient Protection

Reviews

Write a Review

Accounting Basics Questions & Answers

  Using the periodic inventory system compute the cost of

periodic inventory system and inventory costing methodsin chronological order the inventory purchases and sales of a

  A clothing manufacturer has 100 m of silk and 180 m of wool

a clothing manufacturer has 100 m of silk and 180 m of wool. to make a suit requires 2m of silk and 3m of wool and to

  The ceo''s and heather''s treatment of the situation

1.At the beginning of 2011, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods.

  Determining amount to borrow and pro forma statement

determining amount to borrow and pro forma statement balances athena sudsberry owns a small restaurant in new york

  Husky enterprises recently sold an issue of 10-year

husky enterprises recently sold an issue of 10-year maturity bonds. the bonds were sold at a deep discount price of

  Performance of personal and business investments

The performance of personal and business investments is measured as a percentage, return on investment. What type of variable is return on investment?

  Discuss the qualitative concept of comparability

Discuss qualitative concept of comparability. In your opinion, would financial statements of companies operating in one of the foreign countries listed above be comparable to a U.S. company's financial statements? Explain.

  The following present value factors are provided for use in

the following present value factors are provided for use in this problem present value present value of an periods of 1

  Sams employment contract as chief executive of a large

sams employment contract as chief executive of a large corporation waws terminated and he was paid 500000 not to work

  Determine annual depreciation expense using the macrs method

IET 35000 ENGINEERING ECONOMICS PROBLEM SET - FINANCIAL STATEMENTS. A delivery truck is purchased for $35,000. Using spreadsheet software or calculator method, determine the following: The annual depreciation expense using the MACRS method and The bo..

  What annual gift tax exclusions are allowed

The Randalls have a married son and four grandchildren (ages 15, 17, 18 and19). They establish a trust under which the income is to be paid annually to the grandchildren until the youngest reaches age 25.

  Explain why some firms have high price-earnings ratios

Why might a firm trade at a price-to-book ratio greater than 1.0? Explain why some firms have high price-earnings ratios

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd