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ACCT 321 QUIZ 1

ACCT 321 QUIZ 1

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(Multiple Choice)
 
 
 
 
 
 
1.  Following are the operating results of the two segments of Parklin Corporation:
 
 
 
 
Segment A
Segment B
Total
 
 
 
Sales
$10 000
$15 000
$25 000
 
 
 
Variable costs of goods sold
4 000
8 500
12 500
 
 
 
Fixed costs of goods sold
1 500
2 500
4 000
 
 
 
Gross margin
4 500
4 000
8 500
 
 
 
Variable selling and administrative
2 000
3 000
5 000
 
 
 
Fixed selling and administrative
1 500
1 500
3 000
 
 
 
Operating income (loss)
$1 000
($500)
$500
 
 
 
 
 
 
 
 
 
 
Variable costs of goods sold are directly related to the operating segments. Fixed costs of goods sold are allocated to each segment based on the number of employees. Fixed selling and administrative expenses are allocated equally. If Segment B is eliminated, $1,500 of fixed costs of goods sold would be eliminated.
 
 
 
Assuming Segment B is closed, the effect on operating income would be
 
 
 
 
 
 
 
 
 
 
 
a. an increase of $500.
 
 
 
 
 
 
b. an increase of $2,000.
 
 
 
 
 
 
c. a decrease of $2,000.
 
 
 
 
 
 
d. a decrease of $2,500.
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 


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