Reference no: EM132603508
The Cook Company has two divisions: Eastern and Western. The divisions have the following revenues and expenses:
Eastern Western
Sales $550,000 $500,000
Variable Costs $275,000 $200,000
Direct Fixed Costs $180,000 $150,000
Allocated Corporate Costs $170,000 $135,000
Operating Income (Loss) ($75,000) $15,000
Question 1: The management of Cook is considering the elimination of the Eastern Division. If the Eastern Division were eliminated, the direct fixed costs associated with this division could be avoided. However, corporate costs would still be $305,000 in total. Given these data, what would be the overall company's operating income (loss) if the Eastern Division were eliminated?
A. ($155,000).
B. ($75,000).
C. ($60,000).
D. $15,000.
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