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    Shut-down decision, net operating income

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    Company A has 2 divisions - north and south and their data is as follows:

    North South
    Sales 900,000 800,000
    Variable expenses 450,000 300,000
    Traceable Fixed Expenses 260,000 210,000
    Allocated common expenses 240,000 190,000
    Net operating income (loss) (50,000) 100,000

    Should management shut down the north division?
    Calculate the net operating income if the north division is eliminated.

    © BrainMass Inc. brainmass.com October 9, 2019, 6:54 pm ad1c9bdddf
    https://brainmass.com/economics/microeconomics/shut-down-decision-net-operating-income-101916

    Solution Preview

    Should management shut down the north division?

    North
    Sales                                  900,000
    Variable expenses                 450,000
    Traceable Fixed ...

    Solution Summary

    The solution determines whether the management should shut down the north division, and calculates the net operating income if the north division is eliminated.

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