Question

The cost accountant for Mariam’s International Book Center has presented
the below income statement for the period:

Close book Open Book Classics Total
Sale  $60,000 $100,000 $40,000 $200,000
  Cost of goods sold 36,000 65,000 20,000 121,000
Contribution margin 24,000 35,000 20,000 79,000
Order and delivery processing 18,000 21,000 8,000 47,000
Rent (per sq. foot used) 2,000 1,000 3,000 6,000
Allocated corporate costs 7,000 7,000 7,000 21,000
Corporate profit $ (3,000) $ 6,000 $ 2,000 $ 5,000

14. If the Close book is discontinued, the company will report:
A) greater corporate profits C) the same amount of corporate profits
B) less corporate profits D) resulting profits cannot be determined

15. If the Open book is discontinued, profits for the year will decreased by:
A) $35,000 C. $14,000
B) $13,000 D. $6,000

Answer 1