Solution-Determine the operating income for plastics ltd.

Determine the operating income for plastics ltd.

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Reference no: EM133535464

Question: The operations of Plastics Ltd. are divided into the Blow Moulding Division and the Injection Moulding Division. Projections for the next year are as follows:

	Blue Moulding Division	Injection Moulding Division	Total
Sales	$60,000	$40,000	$100,000
Variable Costs	20,000	15,000	35,000
Contribution Margin	$40,000	$25,000	$65,000
Direct Fixed Costs	12,500	30,000	42,500
Segment Margin	27,500	(5,000)	22,500
Allocated Common Costs	10,000	7,500	17,500
Net Operating Income (Loss)	$17,500	$(12,500	$5,000

Required:

A. Determine the operating income for Plastics Ltd. as a whole if the Injection Moulding Division is dropped.

B. Should the Injection Moulding Division be eliminated? What is the financial impact of this decision?

Reference no: EM133535464

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Determine the operating income for plastics ltd.

Reference no: EM133535464

Reference no: EM133535464

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