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Molina Medical Supply Company is trying to decide whether or not to continue distributing hospital supplies. The following information is available for Molina's business segments. Assume that all direct fixed costs could be avoided if a segment is dropped and that the total common fixed costs would remain unchanged if a segment is dropped. Hospital Supplies retail Stores Mail Order Sales $120,000 $440,000 $360,000Variable Costs 64,000 200,000 140,000Contribution Margin 56,000 240,000 220,000Direct Fixed Costs 50,000 80,000 90,000Allocated Common Fixed Costs 20,000 70,000 60,000Net Income $14,000 $90,000 $70,000Assume that if hospital supplies were dropped, retail store sales would increase by 25%. What would the impact of the increase in retail store sales have on overall profitability (compute the effect on retail sales only)?A Income would increase by $105,000B Income would increase by $22,500C Income would increase by $40,000D Income would increase by $60,000
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WHAT IS THE MODERN ACCOUNTING TECHNIQUES.
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