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Compute the change in operating income

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Question - Liberty Corporation has three departments. Data for the most recent year is presented below:

Dept. C, Dept. A, Dept. T C

Sales $400 $1920 $2240

Variable expenses $3280 $1420 $520

Avoidable Fixed expenses: $555 $265 $360

Operating income (loss) $-315 $55 $920

A) Compute the change in operation, income if liberty company eliminates Dept. C and does not replaces it.

B) Compute the change in operating income if liberty company eliminates Dept. C and doubles the sales in Dept. T without increasing fixed costs.

Short Answer. Write the word or phrase that best completes each statement or answers the question.

Reference no: EM131820546

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