Final Exam Practice Questions

Final Exam Practice Questions - 1. The Educational...

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1. The Educational Publishing Group produces three types of teaching aids in elementary schools : Paper, Rocks & Scissors. For the most recent period, income statements for each group are presented below : Paper Rocks Scissors Sales $ 3,000,000 $ 900,000 $ 480,000 Variable CGS ( 2,100,000) (700,000) (300,000) Variable Selling Exp (100,000) (30,000) (40,000) Direct Fixed Costs (550,000) (190,000) (100,000) Allocated Fixed Costs (100,000) (25,000) (25,000) ---------------- --------------- -------------- Operating Income $ 150,000 ( 45,000 ) 15,000 ========== ========= ========= considering dropping the product line. The company has estimated that 90% of the direct fixed costs of the Rocks Product Line would be eliminated if the product line was dropped. What would be the effect on total corporate profits if the Rocks Product Line was discontinued ? a.. Corporate profits increase by $ 26,000 b. Corporate profits increase by $ 1,000 c. Corporate profits increase by $ 45,000 d. Corporate profits increase by $ 126,000
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This note was uploaded on 04/22/2008 for the course ACCT 2251 taught by Professor Lilysieux during the Winter '07 term at CSU East Bay.

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Final Exam Practice Questions - 1. The Educational...

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