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Finlay Grace Sullivan & Company has two sales offices

by | Dec 1, 2023 | Posted Questions

Finlay Grace Sullivan & Company has two sales offices: one located in Portland, Maine, and one in Portsmouth, New Hampshire. Management is considering dropping the Portland Office Management is considering dropping the Portland office. The company’s records the following information:

Portland Portsmouth

Sales $40,000 $50,000

Direct Cost:

Variable $15,000 $25,000

Fixed $10,000 $10,000

What will be the effect on income if the Portland office is eliminated and half of its fixed cost are avoided?

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