Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $46,500 as shown below.Segment Income (Loss)SalesVariable costsContribution marginFixed costsIncome (loss)If the backpack division is dropped, all $484,000 of its variable costs are avoidable, and $216,200 of its fixed costs are avoidable. The impact onGranfield's income from eliminating this business segment would be:Multiple Choice$494,000 decrease$216,200 increase$277,800 decrease$ 978,000484,000494,000540,500$ (46,500)$494,000 increase

An entity may have multiple divisions. The company can decide to eliminate the division which is…

Answered: Granfield Company is considering…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 24P

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