Kline Enterprises, Which Has Three Departments, Recently Reported the Following

Kline Enterprises, which has three departments, recently reported the following results: $\begin{array}{|l|c|c|c|c|}\hline & A&B&C\\\hline \text { Sales revenue } & \$ 12,000 & \mid \$ 48.000 & \mid \$ 40,000 \\\hline \text { Less: Operating costs } & \underline {11.400}& \mid\underline{59.800} &\mid\underline {50.500}\\\hline \text { Operating income (loss) } & \underline{\$ 600} &\mid\underline {\$(11.800) } &\mid \underline{\$(10,500) } \\\hline\end{array}$ The company incurred variable operating costs as well as $25,000 of fixed operating costs. The $25,000 amount was allocated to A, B, and C on the basis of sales revenue and is included in the cost figures noted above. If none of the fixed operating costs can be avoided, which operating loss should be considered first in choosing which department to close?

A) $600.
B) $11,800.
C) $10,500.
D) $50,500.
E) $59,800.

Correct Answer:

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