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    Mar 25, 2014, 07:06 PM
    Accounting Problem in regards to profit. PLEASE HELP!
    I just wanted to make sure I was on the right track for this question The information along with the question is as follows: Training Revenue (200 x 20 x $300) $1,200,000 Less Expenses: Trainer costs (200 x 2 x $1500) 600,000 Managerís Salary 120,000 Training officer 90,000 Administrative staff 80,000 Utilities/phone costs 20,000 Manuals for participants 120,000 Advertising costs 125,000 Postage & other miscellaneous costs 9,450 Total expenses $ 1,164,450 Income from operations $35,550 Common Allocated costs (10% of revenue) 120,000 Net Income or (loss) $(84,450) The question is: What would be the effect on the profit of the whole company, if the Training Centre was closed at the beginning of the new year? Note :If the Training Centre is closed, one administrative staff will be retained to work in the Career Services department. This is what I have come up with as an answer and wanted to see if I was on the right track: It would affect the following costs: Allocated costs (120,000) Income from Operations (35,550) 120,000 + 35,550 = 155,550 Therefore if the Training Centre was closed at the beginning of the year their profit would decrease by $155,550. Is this answer correct? If not how do I go about solving this? Thanks in advance!

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