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Unformatted text preview: a.70,000 = 20,000 + 40,000 + 10,000 Example 714 Ignoring taxes and time value of money Keep Old Replace with New Operating Costs 24,000 x 5 = (120,000) Purchase new 25,000 Sell Old 5000 Operating Costs 18,000 x 5 = 90,000 120,000 110,000 Replacing saves $10,000 Example 715 If segment margin is positive, keep the division X Erie Sales 100,000VC CGS (60,000) Op Expenses (25,000) CM 15,000Direct FC (0) Segment Margin 15,000 costing $15,000 Total with all 6 divisions  profit = $133,240 If you eliminate Erie Sales 1,664,200CGS (978,520 + 16,500 = 995,020) Gross Profit 669,180Op Expenses (527,940 + 23,000 = 550,940) Net Income 118,240 with only 5 divisions MAKING LESS  by 15,000 = segment margin...
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This note was uploaded on 02/27/2012 for the course BUSI 101 taught by Professor Skender during the Spring '08 term at UNC.
 Spring '08
 SKENDER

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