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Question
Barley Enterprises Inc. expects its three departments to yield the following income for next year:
| Dept. D | Dept. E | Dept. F | |
| Sales | $5,000 | $10,000 | $4,000 |
| Expenses | |||
| Avoidable | 3,000 | 2,000 | 5,000 |
| Unavoidable | 4,000 | 4,000 | 1,000 |
| Total expenses | 7,000 | 6,000 | 6,000 |
| Net income (loss) | $(2,000) | $4,000 | $(2,000) |
Which of the following statements is true regarding Flowers business segments?
A. If Dept. F is eliminated, overall profit will increase by $2,000.
B. Overall profit will decline no matter which of these segments is eliminated.
C. If Dept. E is eliminated, overall profit will decline $4,000.
D. If Dept. D is eliminated, overall profit will decrease by $2,000.
E. Eliminating Dept. F will reduce overall profit more than eliminating Dept. D.
Answer
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