Purchase Solution

Shut-down decision, net operating income

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution
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.

Solution Preview

Should management shut down the north division?

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

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • Net Income Increase as result of purchasing and managing goods

    Operating costs: $25000 and the cost of warehousing included in the cost is $30000. Present net income: $75000 and the percentage of net income to sales being 37.5%.

  • Company Case Study: Linear Table Analysis On Shutting Down

    25991 Need you to create a "Shut-Down Decision" Linear table or chart that supports my decision to not shut down. An unprofitable firm has hired me to determine whether they should shut down there unprofitable operation or not.

  • Deciding which base to close

    The Navy has decided that it needs only one of those two bases permanently, so one must be shut down. The decision regarding which base to shut down will be made on cost considerations alone. The following information is available: a.

  • Managing consultant decision

    383368 Firm's decision-making related to operating at a loss. .1. You've been hired as a managing consultant by an unprofitable firm to determine whether it should shut down its operation.

  • Plastics unlimited

    The patent is being amortized (that is, written off on the income statement) evenly over its lifetime. If the company were to shut down SPD, the patent could be sold for $235,000 to an external buyer.

  • Land Value Increase Problems

    What kinds of costs are involved in making a decision to shut down? There are several costs involved in shutting down/closing a business.

  • characteristics of monopolistic competition and oligopoly

    First of all, notice that in the short run, fixed costs are unavoidable; they will have to be paid either if the firm shuts down or if it keeps operating. So the decision of whether the company should shut down or not is independent of fixed costs.

  • Marginal Cost Analysis

    If the industry is competitive, estimate the shut down price. b. If the market price is below the shut down price, regardless of fixed cost, explain why the firm should shut down. c.

  • short-run profit-maximizer or loss-minimizer

    Answer d) In short run the decision criteria is that P>AVC, continue production, else shut down, Since Pshut down 16.

View More Related Solutions