Fabri Corporation Is Considering Eliminating a Department That Has an Annual

question 223

Multiple Choice

Fabri Corporation is considering eliminating a department that has an annual contribution margin of $35,000 and $70,000 in annual fixed costs. Of the fixed costs, $25,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be:

• A) $10,000
• B) ($10,000)
• C) $35,000
• D) ($35,000)

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Definitions:

Decentralized Decision

A management strategy where decision-making powers are distributed among various levels of the organization rather than being concentrated at the top.

Narrow Span

a management structure where a supervisor oversees a small number of subordinates, allowing for close supervision and control.

Organizational Complexity

relates to the various interconnected components within an organization, including its structure, processes, and dynamics that determine its level of intricacy.

Mechanistic Structure

A highly formal organizational structure characterized by rigid hierarchy, clear divisions of labor, and centralized decision-making.