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Question
Flower Enterprises Inc. expects its three departments to yield the following income for next year:
| Dept. F | Dept. G | Dept. H | |
| Sales | $9,000 | $10,000 | $8,000 |
| Expenses | |||
| Avoidable | 3,000 | 2,000 | 5,000 |
| Unavoidable | 4,000 | 6,000 | 1,000 |
| Total expenses | 7,000 | 8,000 | 6,000 |
| Net income (loss) | $2,000 | $2,000 | $2,000 |
Which of the following statements is true regarding Flowers business segments?
A. If Dept. F is eliminated, overall profit will decline $5,000.
B. Overall profit will decline by $2,000 if any one of these segments is eliminated.
C. If Dept. G is eliminated, overall profit will decline $8,000.
D. If Dept. H is eliminated, overall profit will increase $3,000.
E. Eliminating Dept. H will reduce overall profit more than eliminating Dept. F.
Answer
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Related questions
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Q:
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B. Total cost per unit times markup percentage per unit.
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C. Results from past outcomes only.
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E. Speculation of interest rates and economic performance only.
Q:
If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the early years has the higher net present value.