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Cost accounting?


Liberty corporation has three departments.Data for the most recent year is presented below:

A B C
Sales $400 $200 $80
Variable expenses $128 $52 $34
Fixed expenses:
Unavoidable $96 $52 $12
Avoidable $116 $104 $54
Required:
a. compute the operating income of the company
b.compute the contribution margin and operating income of each department.
c.Should any department(s) be eliminatedf? .If any,which one(s) and why?

Operating Profit

A= $60 or 15%, B= -$8 or -4%, C= -$20 or -25% Total= $32 or 4.7%

If any were to be shut down it would have to be B and/or C. They have an excessive amount of avoidable costs. The question is why weren't these costs avoided in the first place. 52% and 67.5% is unacceptable by any standard.

You'll never pass your exams if you get others to do your homework.

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