DJH Enterprises has 3 departments. Operating results for 2019 are as follows: Department 1 Department 2 Department 3
Sales $670,000 $322,000 $856,000
Variable costs 445,000 287,000 602,000
Contribution margin $225,000 $35,000 $254,000
Direct fixed expenses $120,000 $27,000 $163,000
Common fixed expenses 75,000 30,000 94,000
Total fixed expenses $195,000 $57,000 $257,000
Operating income (loss) $30,000 ($22,000) ($3,000)

DJH is considering eliminating the departments that show losses. Assume that the direct fixed expenses could be avoided if the department is eliminated. What effect would elimination of Department 2 have on DJ H's total operating income?

DJH Enterprises

The effect of eliminating Department 2 will increase the total operating income to $27,000 from $5,000.

Explanation:

a) Data and Calculations:

Operating Results for 2019 for the three departments:

                                     Department 1  Department 2 Department 3 Total

                                                                                                              ('000)

Sales                                 $670,000      $322,000       $856,000   $1,848

Variable costs                     445,000        287,000         602,000      1,334

Contribution margin        $225,000        $35,000       $254,000      $514

Direct fixed expenses      $120,000        $27,000        $163,000      $310

Common fixed expenses    75,000          30,000            94,000        199

Total fixed expenses       $195,000        $57,000       $257,000       509

Operating income (loss)   $30,000       ($22,000)         ($3,000)        $5

Loss-making departments eliminated:

                                     Department 1    Department 3        Total                                                      

Sales                                 $670,000       $856,000       $1,526,000

Variable costs                     445,000         602,000         1,047,000

Contribution margin        $225,000       $254,000        $479,000

Direct fixed expenses      $120,000        $163,000        $283,000

Common fixed expenses    75,000            94,000           169,000

Total fixed expenses       $195,000       $257,000        $452,000

Operating income (loss    $30,000          ($3,000)            27,000

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi