The operations of Blink Corporation are divided into the Adams Division and the

Question

The operations of Blink Corporation are divided into the Adams Division and the Carter Division. Projections for the next year are as follows:

Operating income for Blink Corporation as a whole if the Carter Division were dropped would be:

   Adams Division Carter Division Total       Sales $ 574,000   $ 350,000   $ 924,000     Variable costs 203,000   161,000   364,000     Contribution margin $ 371,000   $ 189,000   $ 560,000     Direct fixed costs 170,800   142,800   313,600     Segment margin $ 200,200   $ 46,200   $ 246,400     Allocated common costs 86,800   65,800   152,600     Operating income (loss) $ 113,400   $ (19,600) $ 93,800  

Explanation / Answer

Operating income for Blink Corporation as a whole if the Carter Division were dropped would be: $47600

Blink Corporation (with Adams Division) Amount $ Sales 574000 Variable costs 203000 Contribution margin 371000 Direct Fixed Costs 170800 Margin 200200 common costs (unavoidable costs) 152600 Operating Income (loss) $47600

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