Solution-Compute the change in operating income

Compute the change in operating income

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Reference no: EM132959356

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

	Dept. C	Dept. A	Dept. T
Sales	$4,000	$1,920	$2,240
Variable expenses	3,280	1,420	520
Unavoidable fixed expenses	480	180	440
Avoidable fixed expenses	555	265	360
Operating income (loss)	$(315)	$55	$920

Olson Company is considering eliminating Dept. C because it is operating at a loss.

Required -

A) Compute the change in operating income if Olson Company eliminates Dept. C and does not replace it.

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

Reference no: EM132959356

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Compute the change in operating income

Reference no: EM132959356

Reference no: EM132959356

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