A Study Has Been Conducted to Determine If One of the Departments

question 214

Multiple Choice

A study has been conducted to determine if one of the departments in Carry Corporation should be discontinued. The contribution margin in the department is $80,000 per year. Fixed expenses charged to the department are $95,000 per year. It is estimated that $50,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the yearly financial advantage (disadvantage) for the company would be:

• A) ($15,000)
• B) $15,000
• C) ($30,000)
• D) $30,000

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