Reference no: EM132598912

The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:

East

Sales $575,000

Var. Cost $188,000

Traceable fixed cost $172,500

allocated common corporate costs $122,900

net operating income (loss) $91,600

West

Sales $490,500

Var. Cost $259,500

Traceable fixed cost $195,400

allocated common corporate costs $142,100

net operating income (loss) $106,500

Question 1: The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:

Multiple Choice

Option 1: $(14,900)

Option 2: $91,600

Option 3: $(50,500)

Option 4: $(106,500)