One Department in a Company Had a Contribution Margin of $15,000

question 48

Multiple Choice

One department in a company had a contribution margin of $15,000 and a net loss from operations of $2,000.The indirect expenses allocated to this department would have been incurred whether or not the department existed.If this department had been eliminated,the company's reported net income would have been

• A) $2,000 higher.
• B) $15,000 lower.
• C) $13,000 lower.
• D) the same with or without the department.

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Definitions:

Relevant Range

The spectrum of operations within which the behaviors of variable and fixed costs are considered accurate.

Operating Decisions

Definition: Decisions made by management related to the day-to-day operations of a company, including costs, production, and pricing strategies.

Strategic Level

A high-level perspective in organizational planning that focuses on long-term goals and overall direction of an organization.

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of activity but not directly proportional.