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    Closing a division

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    Baldwin Division earns a contribution margin of $200,000 and has a division margin of $70,000. If Baldwin Division is closed, the firm can eliminate all of the direct division expenses and $110,000 of common expenses. These facts indicate that closing the division will cause the firm's operating income to:
    Increase by $90,000.
    Decrease by $90,000.
    Increase by $40,000.
    Decrease by $40,000.

    © BrainMass Inc. brainmass.com October 9, 2019, 10:47 pm ad1c9bdddf
    https://brainmass.com/business/the-closing-process/closing-division-232072

    Solution Preview

    The direct expenses for Baldwin Division are ...

    Solution Summary

    The solution explains the effect on operating income of closing a division.

    $2.19