Select Page
  

Olson Company has three departments. Data for the most recent year is presented below:Dept. C Dept. A Dept. TSales$4,000$1,920$2,240Variable expenses3,2801,420520Unavoidable fixed expenses480180440Avoidable fixed expenses555265360Operating income (loss)$(315)$55$920Olson Company is considering eliminating Dept. C because it is operating at a loss.Required:Compute the change in operating income if Olson Company eliminates Dept. C and does not replace it.Compute the change in operating income if Olson Company eliminates Dept. C and doubles the sales of Dept. T without increasing fixed costs.