Gion Company is considering ellminating its Windows division, which reported a loss for the prior year of $92000 as shown below.Segment Income (Loss)SalesVariable costsContribution marginFixed costsIncome (loss)$ 1,122,000987,000135,000232,000$ (97,000)If the Windows division is dropped, all of its variable costs are avoidable, and $150,800 of its fixed costs are avoidable. The impact on Glon's operating income fromeliminating this business segment would be

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Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $97,000 as shown

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

Gion Company is considering ellminating its Windows division, which reported a loss for the prior year of $92000 as shown below.
Segment Income (Loss)
Sales
Variable costs
Contribution margin
Fixed costs
Income (loss)
$ 1,122,000
987,000
135,000
232,000
$ (97,000)
If the Windows division is dropped, all of its variable costs are avoidable, and $150,800 of its fixed costs are avoidable. The impact on Glon's operating income from
eliminating this business segment would be

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