CORRECT ANSWER C. PARKLIN’S OPERATING INCOME WILL GO FROM $500...

254.

Correct answer c. Parklin’s operating income will go from $500 to ($1,500) if Segment B is

closed, a decrease of $2,000.

Sales

$10,000

Variable cost of goods sold

4,000

Fixed cost of goods sold

2,500

(+$1,000 from Segment B)

Gross margin

3,500

Variable selling & admin.

2,000

Fixed selling & admin.

3,000

($1,500 from Segment B)

Operating loss

($1,500)