Fabri Corporation Is Considering Eliminating a Department That Has an Annual

question 260

Multiple Choice

Fabri Corporation is considering eliminating a department that has an annual contribution margin of $30,000 and $70,000 in annual fixed costs. Of the fixed costs, $12,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be:

• A) ($40,000)
• B) $40,000
• C) ($28,000)
• D) $28,000